Stocks: house prices continue to rise - reasons

In spite of the uncertainty in the domestic and global economy, there is a growing trend of rising residential real estate prices. At the same time, for many households in Greece, the cost of housing has become prohibitive, even though house and rental prices have not reached the historic highs recorded before the financial crisis.

According to the Financial Stability Report published by the Bank of Greece, apartment prices (in nominal terms) rose by 13.9% year-on-year in the second quarter of 2023, compared to an increase of 11.8% in 2022.

Prices for new apartments (under 5 years old) rose at a compound annual rate of 13.8% in the second quarter of 2023, while prices for older apartments rose by 14.1%.

Specially''high annual growth rates of apartment prices were registered in the big cities of Greece, particularly Thessaloniki (16.4%) and other major cities (14.6%), exceeding the average growth rate for the whole country.

At the same time, expectations for the Greek real estate market remain positive despite uncertainty in the domestic and global economy, the Bank of Greece said.

Short-term investment interest, especially from abroad, is expected to remain high, especially for privileged positions in the Attic Peninsula and tourist regions.

Medium-term, initiatives related to support for certain categories of households (e.g.

It is noted, however, that the real estate market in many European Union countries is already on the way to a significant correction in terms of the number of transactions, prices and yields.

Housing prices are still not reaching historic highs.

According to the apartment price index compiled by the Bank of Greece for the whole country, the highest index price was recorded in 2008 (101.7) and then steadily declined to the lowest price in 2017 (59). Since then, the apartment price index has been steadily increasing and amounted to 90.6 wo''second quarter 2023, lagging 11.1% behind the maximum price.

The level of rents also develops similarly, with a corresponding index of 98.5 based on third quarter 2023 data, compared to 94.8 in the second quarter of 2022.

The rent index, unlike the house price index, is well below its historic high (124.3, third quarter 2011).

Despite an increase in affordable household income, Greece has the most unfavorable position among European countries in terms of housing costs relative to affordable income.

In particular, the cost of housing as a percentage of affordable household income was 34.2% for 2022, compared to an average of 19.9% for the whole''Europe.

Logically, Greece's housing cost overload index has the highest value among eurozone countries, as for 2022, 27% of the country's population incurred housing costs amounting to more than 40% of their affordable income, while the corresponding figure for the eurozone was 9.4%.

Greece's position in the ranking is influenced by its low per capita income compared to other European Union countries.