Greece: Residential Market Snapshot Q2 2019

02 Apr/19

3.1 Residential Market

The Greek residential property market traditionally has been serving as the growth locomotive of the Greek economy. Some key characteristics are the high rate of home ownership; offices are not highly concentrated in the CBD of the city; many degraded areas are near central locations and with price differentials that can be remarkable; short term home-sharing changed significantly rents around the center of Athens and Thessaloniki and upcoming players in real estate are looking for new opportunities due to the ‘golden visa’ scheme. Low prices attract foreign investors such as Chinese, Russian, Israeli and others, who invest in the available units, mainly in the area of the historic centre of Athens.

As the Greek economy is growing and is expected to grow further in the next few years, the real estate market is also positively affected. Following seven years of residential values recording a downward trend, the cycle is now exhibiting signs of a turnaround. This improvement in the real estate sector is evident in the major cities, with Athens experiencing an increase of 3.5% in the price index of dwellings since 2017 (the first increase since 2008) compared to 2013 where the recorded decline was 12.3%. In Thessaloniki, the country’s second largest city, 2018 was the first increase of 0.7% in residential prices since 2008, compared to 2012 where the recorded decline was 13.6%. In other cities excluding Athens and Thessaloniki, the prices of dwellings increased for the first time since 2008 by 0.8% in 2018, while the biggest drop was in 2012 and the change was -10.7%.

Source: Bank of Greece, edited by Delfi Real Estate

Source: Bank of Greece, edited by Delfi Real Estate

For the first time since 2008, there was a positive change in investment in construction of dwellings due to high demand for new built residences. This positive trend is also evident from the index of net capital inflows from abroad for property acquisitions in Greece, which has improved in the last three years.

Source: Bank of Greece, edited by Delfi Real Estate

According to Bank of Greece and data from credit institutions, nominal apartment prices are estimated to have increased on average by 2.5% year-on-year in the fourth quarter of 2018, whilst in 2018 the average annual increase in apartment prices was 1.5%, compared with an average decrease of 1.0% in 2017.

More specifically, in the fourth quarter of 2018, the year-on-year rate of increase in prices was 2.7% for "new" apartments (up to 5 years old) and 2.3% for "old" apartments (over 5 years old). For 2018, prices of “new” apartments increased on average by 1.7%, compared with a decline of 0.8% in 2017, whereas prices of “old” apartments increased by 1.3% in 2018, compared with a decrease of 1.2% in 2017.

According to regional data, in the fourth quarter of 2018 apartment prices are estimated to have increased year-on-year by 4.2% in Athens, 2.1% in Thessaloniki, 1.1% in other cities and 0.7% in other areas of Greece. For 2018, apartment prices increased on average by 2.4%, 0.9%, 0.8% and 0.6%, respectively, in the above-mentioned areas. Finally, with regards to all urban areas of the country, in the fourth quarter of 2018 apartment prices increased by 2.9% year-on-year, whereas for 2018 the average increase was 1.6%.

Source: Bank of Greece, edited by Delfi Real Estate