It also continued first half of 2023 the upward trend in residential property prices. In particular, according to data published by the Bank of Greece (Financial Stability Report), the apartment prices (in nominal terms) increased in the second quarter of 2023 by 13.9% year-on-year, compared to an increase of 11.8% in 2022. Prices of new apartments (up to 5 years old) in the second quarter of 2023 increased at an average annual rate of 13.8%, while prices of old apartments increased by 14.1%.

By geographic region, strong annual rates of increase in apartment prices were recorded in the country’s large urban centers and more specifically in Thessaloniki (16.4%) and other large cities (14.6%), which exceed the corresponding average rate of increase for the whole country.

According to the Bank of Greece’s estimates, expectations for the Greek residential real estate market remain positive, despite the uncertainties in the domestic and global economy. In the short term, it is estimated that investment interest, mainly from abroad, will remain intense especially for specific privileged positions in the Attica basin and for areas with tourist characteristics.

In the medium term, initiatives related to supporting specific categories of households (e.g. young, vulnerable social groups) (e.g. “My Home” program) to acquire a home are expected to contribute to stimulating demand, while corresponding initiatives to renovate of old houses (e.g. “Renovate” – “Save” program) are expected to contribute to the improvement of the building stock. However, it is pointed out that the residential real estate market in many countries of the European Union is already undergoing a significant correction in terms of the number of transactions, prices and yields.

In addition, it is pointed out that house prices in Greece are still far from the historic high recorded before the financial crisis. Based on the apartment price index compiled by the Bank of Greece for the entire country, the highest value of the index was observed in 2008 (101.7) and then followed a steady downward trend, to record the lowest value in 2017 (59 ). Since then, the apartment price index has been on a steady upward trajectory, reaching 90.6 in Q2 2023, down 11.1% from its all-time high.

The evolution of the level of rents is corresponding, with the relative index standing at 98.5 based on the data of the third quarter of 2023, against 94.8 in the fourth quarter of 2022. The rent index, in contrast to the house price index , remains significantly lower than the highest value it has received historically (124.3, Q3 2011).

Housing costs – Greece is at a disadvantage

Despite the increase in household disposable income, Greece is ranked in the most unfavorable position among the countries of Europe in terms of housing costs. More specifically, according to data from the Bank of Greece, the cost of housing as a percentage of the disposable income of households in Greece was set at 34.2% for 2022, compared to 19.9% ​​on average for Europe of 27.

Likewise, the excessive burden due to housing costs index for Greece receives the highest value among the countries of the euro area, as for the year 2022 27% of the country’s population shouldered housing costs that corresponded to a percentage of more than 40% of the disposable income of, when the corresponding percentage of the population in the euro zone was 9.4%. Greece’s position in the ranking is affected by the low per capita income compared to the rest of the European Union countries.

Dynamic recovery in real estate and room for growth for Greek AEEAP

Alpha Finance also refers to the dynamic recovery of the Greek real estate market after a prolonged period of crisis in its new report, while adding that, according to its estimates, the recovery of the Greek real estate will continue thanks to the positive macroeconomic trends, the increase in foreign direct investment and tourism as well as the possible increase in financing from the banking sector.

Taking a historical look back at Greek real estate, Alpha Finance reports that in the past decade, the Greek real estate market faced significant challenges due to the fiscal crisis and deep recession that hit the country. The impressive recovery of recent years is due on the one hand to political stability and on the other to positive macroeconomic developments which, among other things, led to the recovery of investments and the upgrading of the country’s credit rating to investment grade, the stock exchange emphasizes in its report.

Greek Real Estate Investment Companies (HRIs) benefited from this recovery, actively expanding their portfolios and diversifying their investments. The domestic AEEAP market includes nine companies, specialized in the acquisition, management and investment in real estate and financial markets, which are taking advantage of the current circumstances in order to achieve strong and sustainable growth. The portfolios of the Greek AEAAPs are quite diversified, while commercial properties such as office buildings, retail stores and logistics dominate them, with the value of the total portfolios of the listed companies reaching 3.9 billion euros based on the latest published data.