Where Did Real Estate Prices Grow the Most?
According to data from the Bank of Greece in the first quarter of this year, the rate of house price growth in Greece is reaching record highs. More specifically, prices rose 14.5% year-on-year in Greece as a whole, and even sharper spikes were seen in Greece’s 2 largest urban centers, reaching 16.5% in Attica (the region which includes Athens) and 16.1% in Thessaloniki.
Prices in other large cities increased by 13.1%.
In the fourth quarter of 2022, the annual price rise reached 15.2%, which was the highest figure in decades.
For newly constructed properties, there was an increase of 12.8%, while for previously owned properties, there was a boost of 15.6% compared to the same time frame in 2022. The Bank of Greece also updated its figures from 2022 as a whole, showing a growth of 11.7%, compared to a 7.6% increase in 2021.
Prices have grown significantly in Attica, where they have boosted 68% since the first quarter of 2017. This is just short of the peak of the 2007 housing market. The growth of prices in Attica is higher than the average in all of Greece, which is 49% for the time frame 2017-2023 (Q1).
What Caused the Price Increase?
Over and above domestic demand in Greece, the rise of prices in Attica in Q1 is likely because the area is a target for foreign investors.
The amount of foreign investment through the Golden Visa program has been boosted because of the changes coming to Golden Visa laws in August 2023. More specifically, it will be harder to get a residence permit because the minimum investment for property acquisitions will increase.
In the center of Athens, the northern and southern suburbs, Santorini, Mykonos, and the Municipality of Thessaloniki, the minimum requirement will double from 250,000 Euros to 500,000 euros, resulting in an increase in applications for residence permits before the new changes.
Low Supply of Real Estate in Greece
One other reason for the boost in prices of real estate is low supply. The absorption rate of real estate is much higher than the replacement rate (the number of properties on the market for sale).
Fewer properties are being put on the market because construction has slowed in the past years. In 2022, the number of new building permits boosted by 126% from a low point of 9,793 permits in 2016. Even with these encouraging figures, we must keep in mind that about 30,000 new apartments entered the market this year, compared to about 200,000 apartments that entered the market in the mid-2000s.
