ECB: Greeks are pessimistic about real estate prices and mortgage loans - Economic Courier - ot.gr

Greek citizens are expressing pessimism regarding both current real estate prices and mortgage interest rates, as indicated by a special study conducted by the European Central Bank. In particular, residents of Greece expect significant increases in housing prices this year. This was noted in a consumer survey of the eurozone conducted in December 2023 across 11 countries, including our country for the first time. New participants in the study include countries such as Ireland, Greece, Austria, Portugal, and Finland. Previously, only responses from leading economies, including Germany, France, Italy, Spain, the Netherlands, and Belgium, were taken into account.

As part of the research, it became clear that Greek citizens are considering a likely increase in housing prices in the coming year at a level higher than8%This figure significantly exceeds the average in the eurozone, where growth is expected to be only2.2%, which is also slightly below the figures2.4%, obtained in a study by the ECB a year earlier.

These expectations correlate with a significant increase in real estate prices in Greece over the past few years, even despite a sharp rise in mortgage interest rates. At the same time, the eurozone is experiencing a slowdown in growth rates and even a decline in prices in some countries.

In Greece, expectations for an increase in housing prices are even higher than those of the Portuguese, who are forecasting a rise of about5%At the opposite end of the spectrum are the residents of Finland, who believe that real estate prices will stabilize soon, although their sentiments remain less than optimistic. In Italy, however, forecasts for the coming months regarding mortgage rates continue to indicate a decline, as the rate is lower.6%was recorded after July 2023.

Among other strong economies in Europe, expectations for mortgage rates are slightly lower.5%As for the percentage of Greeks who applied for loans in the last quarter, it is just over10%, but nevertheless it is lower than the average for the entire eurozone (where this indicator exceeds16%In Germany and Spain, the number of applications for consumer loans has significantly increased, and in both countries, about20%The respondents submitted applications for a loan.

As for mortgage interest rates, Greek citizens predict that they will be higher by the end of 2024.6%This is above the average in the eurozone, where residents expect a rate of around5.3%Expectations regarding interest rates remain high, especially in light of the anticipated rate cuts from the ECB this year. According to ECB data, the real difference in expectations for housing price growth among different income levels remains significant, as households in the lowest fifth percentile expect an increase in1.5a percentage point higher than that of the income fifth percentile.

The average forecasts for mortgage rates in Europe over the next 12 months indicate a decrease to5.3%from the previous ones5.5%Households with the lowest income levels are expecting the highest interest rates. The projected median rates for mortgage loans are estimated to be at4.5%, which also represents a decrease compared to4.8%in November.

Moreover, in recent months, access to credit for households and individuals has been particularly challenging, but it is expected that the situation will improve somewhat in the coming year.