The Greek housing market is witnessing a notably swifter rise in prices compared to its European counterparts, making up for previous setbacks endured during a prolonged period of economic instability.
Various factors such as increased investment, especially in construction, rising Foreign Direct Investment (FDI) in real estate, the booming tourism sector, the growth of the sharing economy, the implementation of the Golden Visa program, and the accumulation of savings during the pandemic, stand out as key drivers propelling the domestic residential real estate market, setting it apart from other developed nations. Recent data suggests a slowdown in price growth or even a decline in comparable markets.
The pivotal question lingers: Can the upward momentum of the Greek housing market be sustained through 2024?
Real estate market experts underscore non-cyclical demographic factors such as population aging and urbanization, coupled with seasonal considerations like the scarcity of highly energy-efficient housing and subsidized programs such as “My Home,” as ongoing drivers of robust demand.
However, they stress the likelihood of necessary price adjustments in the near term, particularly in requested sales prices, as there’s a noticeable “buyer fatigue,” especially among Greek buyers, resulting in a decrease in contract signings.
Experts indicate that if there’s an increase in supply—such as properties held by funds being introduced to the market—paired with a decrease in interest rates, improvements in construction costs, and the absence of geopolitical disruptions that could elevate energy prices and subsequently inflation, such adjustments, at least in nominal terms, may be feasible.
Starting its recovery in 2018, the residential real estate market has maintained an upward trajectory throughout 2023, showing a double-digit rate of price change.
Data from the Bank of Greece (as of the 9th month of 2023) reveals that residential property prices have rebounded by 57.5% compared to their pre-financial crisis peak.
Specifically, the apartment price index compiled by the Central Bank for the entire country reached its peak in 2008 at 101.7 before declining consistently, hitting its lowest point in 2017 at 59. Since then, the index has steadily climbed, reaching 92.9 in Q3 2023, trailing just 8.65% below its historical peak.
However, during this period, the role of foreign investors, as highlighted by figures from the Central Bank, significantly influences market dynamics, with limited purchases from Greeks, typically financed with equity capital.
It’s notable that foreign direct investments in the real estate market experienced a notable surge during the 9th month of 2023, reaching net receipts of 1.644 billion euros, marking a 28.7% increase compared to 2022.
Given the market’s reliance on foreign capital inflows, potential corrections are plausible. However, within the luxury segment, particularly luxury homes, Greece emerges as an “emerging market,” especially in an environment of high interest rates.
Alongside Portugal and Spain, Greece stands out as a leading European destination due to comparatively lower prices.
The “Golden Visa” program serves as a significant gauge for measuring the evolution of demand from abroad. According to recent data, there was a remarkable 117% increase in permanent investor applications between January and November 2023 compared to November 2022.
The recent doubling of the limit for obtaining the “Golden Visa” to 500,000 euros in popular investment areas has shifted interest to other regions such as Piraeus.
According to data from the Spitogatos Property Index (SPI), Piraeus and its suburbs experienced substantial increases in asking prices in the fourth quarter of 2023.
Real estate brokers and law firms specializing in investment immigration programs note that the significant increase in asking prices in Piraeus is likely seasonal, with many properties lacking the investment characteristics sought by investors.
In Attica, despite significant increases in demand, areas surrounding Piraeus remain the most budget-friendly, followed by the western suburbs.
Thessaloniki’s most budget-friendly area lies outside the prefecture, with affordable opportunities also found in various other prefectures across Greece.
Currently, Kastoria offers the lowest asking prices, experiencing the largest decrease in average asking prices for houses in the fourth quarter of 2023.
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