Real Estate: The rally in home prices continues - Reasons - Economic Courier - ot.gr

Despite the uncertainties in the national and international economy, there is a steady increase in housing prices. However, for many families in Greece, housing costs have become excessively high, even considering that the current prices for apartments and rentals have not yet reached the record levels recorded before the financial crisis. According to a financial stability report published by the Bank of Greece, apartment prices increased in the second quarter of 2023.13.9%in annual terms, while in 2022 this figure was11.8%.

The demand for housing shows differences by property type: prices for new apartments (up to five years old) are increasing on average by13.8%in annual terms, while old apartments have increased in price by14.1%When looking at the regions, a strong price increase is observed in large cities like Thessaloniki, where prices have risen by16.4%and in other large settlements, where the increase was14.6%These figures significantly exceed the national averages.

Trends in the Greek residential real estate market remain positive, although the economic situation in the country and the world raises some concerns.

In the medium term, measures aimed at supporting certain categories of the population, such as youth and vulnerable groups, include a proposal for the "My Home" program, which could help increase demand for housing. Similar initiatives for renovating old real estate, such as the "Renovation" program, could also contribute to improving the quality of the housing stock.

However, it should be noted that the residential real estate markets in other EU countries are already on the path to a significant correction in terms of the number of transactions, prices, and rental yields. Furthermore, housing prices in Greece are still far from the peak levels recorded before the crisis.

According to the apartment price index compiled by the Central Bank of Greece, the highest index was recorded inin 2008 (101.7), after which there was a steady decline that reached a minimum at in 2017Since then, the price has started to rise steadily, and in the first quarter...2023the index reached90.6that on11.1%less than the record2008 yearA similar trend is observed in the rental segment: the rental index amounted to98.5in the third quarter2023compared to94.8in the fourth quarter2022However, it is still significantly below the historical maximum.124.3in the third quarter2011 year).

Despite the increased disposable income of the population, Greece ranks among the highest in Europe in terms of the ratio of housing costs to available income.2022 yearthis indicator amounted to34.2%for Greek households, compared to the average value in19.9%by27 EU countriesThe indicator of excessive housing burden in Greece is the highest among Eurozone countries.in 202227%The country's population was forced to spend more40%of their income on housing, while the average percentage in the Eurozone was9.4%The current situation in Greece is partly explained by the low income per capita compared to other countries in the European Union.