Housing costs in Greece are rising: Alpha Bank - Sender Economic Postman - ot.gr

Alpha Bank analyzes the trend of housing costs in Greece, noting that property prices continue to rise. According to the report, nominal house prices in Greece have remained on an upward trajectory since the beginning of 2018. After a temporary slowdown during the pandemic, price increases have accelerated again since the beginning of 2021, reaching 11.2% in the third quarter of 2022 compared to last year.

At the same time, house price growth in the euro area slowed to 6.8% in the third quarter of 2022, from 9.2% in the second quarter and 9.8% in the first quarter of the year. Rising house prices, on the one hand, lead to an increase in non-financial household wealth, which affects a large part of the population, given the high level of home ownership in the country. On the other hand, the parallel rise in energy prices, rents and interest rates has a positive impact on the cost of housing, which, according to Eurostat's definition, includes rent, mortgage payments and utility costs (water, electricity, heating).

It is noted that the cost of housing in Greece, although still high, has decreased significantly compared to the previous decade, i.e. during the economic crisis. According to Eurostat, the cost of housing in the country in relation to affordable income has gradually declined from 42.5% in 2014 to 34.2% in 2021.

Demographic characteristics

Demographic characteristics are also important in analyzing housing costs.

Short-term outlook

In the short term, the change in housing costs in a family's budget will be the result of various factors, including the change in affordable household income, which increased 6.5% year-over-year in the first half of 2022. Also playing a role is the change in the Harmonized Index of Consumer Prices (HICP) for home values, which rose 25% in 2022, mainly due to higher energy prices.

The rising rates are also expected to affect property owners with mortgages or other loans. Some of this growth in Greece is expected to be covered under the corporate social responsibility program through contributions from the four systemic banks. Under the plan, a 50% interest rate increase subsidy will be provided beginning June 30, 2022 and for 12 months.