What is the situation with the economy and the real estate market in Greece in 2023?

Recently we touched upon the topic of affordability of Athens as the capital of Europe in terms of housing prices. It is noteworthy that in recent years in Greece there has been an increase in real estate prices, but the real increase in the cost of a "square meter" of housing has been offset by inflationary processes. As a result, instead of rising prices, we are in a situation where the cost of housing has started to decline. In this regard, it is important to analyze the economic forecasts of Greece in order to understand the current state of the economy of this country, which has experienced two significant crises since the early 2000s.

The economic situation in Greece in 2022

What was the economic situation in Greece in 2022? In the first half of the year, the economy showed positive results, recording a growth of about7,8%However, by the end of the year, changes occurred: the growth rate slowed down, which was linked to high inflation and rising energy prices. In response to these challenges, the Greek government proposed a recovery and support program for its economy, which included the development of extensive state aid measures. This initiative aims to mitigate the negative impact of inflation on businesses and household incomes. Support is expected to continue until the end of 2023.

Factors of economic growth

Despite inflationary pressures and the ongoing energy crisis, Greece was able to maintain stable growth in the first half of 2022, reaching a7.8%compared to the same period last year. One of the factors contributing to this growth was:

• Restoration of tourist activity.
• Growth of export services.

It is also reassuring that the export of goods shows positive dynamics despite the unstable international situation.

Situation on the labor market

As for the labor market situation, jobs continued to be created, although the pace of new hiring was slower. Nevertheless, the unemployment rate decreased to12.2%in August 2022.

Economic growth prospects for 2023-2024

So what are the prospects for Greece's economic growth in 2023 and 2024? Analysts suggest a slowdown in merchandise exports in 2023, but similar trends are likely elsewhere in Europe and globally. At the same time, the tourism sector will continue to be resilient, benefiting from high-income countries.

Economic recovery of Greece

In light of the lifting of the restrictive measures that were implemented due to the pandemic, as well as the gradual recovery of the economic situation, Greece's public deficit is expected to decrease to 4.1% in 2022. Next year, this level is projected to fall to 1.8% of the country's gross domestic product.

State of the real estate market

An overview of the current realities in the housing market in Greece shows that from 2010 to mid-2022, there was a significant decline in residential property prices, amounting to 22.5%. It was only in 2017 that a slow recovery in prices began, and in 2018, an increase was recorded, resulting in a rise of about 1.8% in the cost per square meter compared to the previous year.

Postpandemic price increases

Despite the negative consequences of the COVID-19 pandemic for various sectors of the economy, the real estate market in Greece has shown positive dynamics since the beginning of 2021. The confident price growth continued in 2022, driven by the desire to combat inflationary processes and the rising cost of loans. In 2022, the average price per square meter increased by approximately 8-10%.

Investments in residential real estate

According to Alpha Bank's Q1 2022 survey, the data had a positive impact on the domestic housing market. The real growth of investments in residential real estate amounted to 18.6%, while nominal house prices increased by 8.6% compared to the same period last year.

The prices per square meter of housing vary depending on the region:

• Athens - from €2400 to €2480
• Crete - from €2500 to €2750
• Rhodes - from €1670 to €2330
• Corfu - from €1160 to €1830
• Thessaloniki — from €1600 to €2200
• Corinth - from €600 to €720

Interest of foreign investors

According to the Central Bank, the interest of foreign investors in Greek real estate has increased significantly, with the share of international investments increasing by 60% year-on-year to around €1.28 billion in 2022.

Elite commercial real estate

From the perspective of the high-end commercial real estate market, data from Alpha Bank shows that while prices have continued to rise over the past two years, the pace of this growth has been significantly weaker compared to the figures observed before the pandemic began. Importantly, during the recovery of the commercial sector from 2017 to 2020, prices for premium offices grew at a faster rate than rental rates.

However, starting in 2021, there is a shift in the dynamics, where rent growth (3.7%) began to exceed the increase in office space prices.

Prospects of the real estate market

Analysts in 2022 noted positive changes in the market and highlighted that the future of real estate in Greece looks quite promising.Locals emphasizeThe standard of living in the country has significantly improved over the past three years after a deep crisis. The increased interest in purchasing land and real estate also indicates a revival of activity in the market.

Conclusion

In conclusion, it can be said that Greece's economic indicators in recent years have demonstrated resilience and optimism, despite the challenges posed by inflation and global economic trends.

It is noteworthy that even in the context of rising real estate prices, investor interest remains strong, indicating confidence in the future of the market. Greece is becoming not only an attractive tourist destination but also a profitable place for investments in residential and commercial real estate.

Prospects of the economy

• The commercial sector is also experiencing a surge in activity after the pandemic, which is confirmed by the improvement in the market.
• I'm hopingWith the further recovery of the economy and easing of inflation, Greece will be able to create even more favorable conditions for investment and growth in real income for the population.
• It is important to continue monitoring these changes in order to effectively respond to potential challenges and take advantage of emerging opportunities.

Forecast for 2023 and 2024

The years 2023 and 2024 promise stable and moderate growth, which contributes not only to economic development but also to the improvement of the quality of life for the Greek population. This is a time whenGreece can be justifiably proudwith their achievements and continue to move forward against the backdrop of positive economic trends.