The housing market is losing steam, with investment declining for three consecutive quarters.
Concerns are growing over a possible further decline following the implementation of measures to tighten the conditions for obtaining a golden visa, while efforts are underway to lift mortgage issues, which are also at extremely low levels.
While the government is trying to inject money into the market through subsidized home loans, banks are easing lending conditions, even based on age, as current home price and income combinations make it virtually impossible to lend to the majority of would-be property buyers.
Of all the indicators used to monitor real estate market developments, only the price index has returned to pre-crisis levels. The increase in the price index has not translated into growth in residential investment. Residential investment recorded a decrease in the first quarter of 2024, and as a result, it now accounts for only 13-14% of total investment made in the country. Before the crisis, that is, in 2006-2008, residential investment reached 36-42%.
The lack of a renewed interest in real estate investment is troubling because, on the one hand, the continued increase in housing demand is not keeping up with supply, rekindling the country’s housing problem, while on the other hand the desired increase in investment has not been achieved. Also, as long as the rise in real estate prices continues without a corresponding increase in investment interest, the possibility of another downward cycle in the real estate market increases.
According to the first quarter GDP development figures published by the Hellenic Statistics Authority, of the total investment (gross fixed capital formation) which reached 7.37 billion euros in the first quarter, only 984 million euros (about 13.34%) was related to housing. While overall investment increased by 6% in the first quarter, real estate investment decreased by 12%. The fall in interest rates is also reflected in mortgage lending, which is limited to 100-130 million euros per month.
