Rising prices threaten to drive Greeks out of real estate
Data from the Bank of Greece shows that real estate price growth accelerated to 3.2% in the first quarter of the year, from 2.5% in the fourth quarter of 2020.
From Greece the real estate market is recovering rapidly as the economy recovers from the pandemic, but growth threatens to push real estate assets out of the reach of many nationwide, with wages remaining low and unemployment rates high.
At a time when fears of a new real estate bubble are growing in Europe, a rise in prices is also expected for Greece despite persistent structural problems in the economy, hampering job growth amid tight bank lending. Over the past 18 months in Greece, house prices have shown strong resilience, surprising many in the market. The momentum seen before the start of the pandemic continues to drive up prices even as buyers remain constrained.
Data from Bank of Greece show that real estate price growth accelerated to 3.2% in the first quarter of the year, compared to 2.5% in the fourth quarter of 2020. For the whole of last year, the prices of apartments grew at an average annual rate of 4.3%, compared to an increase of 7.2% in 2019. Prices continued to climb in 2020, although the economy contracted by 8.2% due to of the pandemic.
For 2021, everyone more or less agrees that prices will continue to rise due to the limited supply of new housing and large infrastructure and renovation projects that attract buyers’ interest in certain areas. As the market continues to recover, the problems in the labor market, however, remain enormous. Unemployment remains high, falling to 16.3% in 2020 from 17.2% last year, but will remain at its current level this year. In 2022, the European Commission sees unemployment in Greece at 16.1%.
Among those who work, data from statistical authorities shows that income levels are falling while house prices are rising.
According to the latest data, wage income levels in the last quarter of 2020 fell to 17,682 euros from 17,854 euros a year earlier, in a downward trend that is expected to continue in 2021.
Market officials point out that buying interest at the moment comes mainly from foreigners and entrepreneurs, most of the transactions taking place in Athens. Purchasing activity is expected to increase when travel habits pick up, with the country’s attractive Golden Visa program also serving as a draw card.
These developments are threatening to exclude workers from the market. While there is no risk of overheating prices, as seen in Europe, acquiring property in Greece becomes a dream for workers, unless the labor market improves significantly and the banks don’t turn on the lending tap. It should be noted that in Greece there are no supply problems, as is the case in European markets where fears of price bubbles are increasing, in countries such as Belgium and the Netherlands. Low.
The housing stock in Greece is large, but it is old and needs to be renovated. Additionally, fears that the market will be hit by a significant shock from home sales due to lending issues appear to be exaggerated as the number of forced auctions appears to be gradually restarting this summer.
At present, only sellers in the market feel a heightened sense of confidence. “As the economy recovers, so do the demands of homeowners. They are usually in no rush to sell, most preferring to wait before deciding to lower their prices.“said a senior market official.”In Athens, the most marked interest remains the southern suburbs and the historic center. Now we are also seeing more and more buyers looking to the northern suburbs, areas that are attracting more foreigners. These are investors who have done their homework and conducted extensive market research as they aggressively bid on the assets.,” he added.