Greece's Residential Property Market Analysis 2024
Greek house prices continue to accelerate, amidst strong demand from foreign homebuyers, growing residential construction activity, and continued economic growth in the country.
In Greece's urban areas, house prices soared by 10.76% in Q1 2024 from a year earlier, following year-on-year increases of 12.48% in Q4 2023, 13.05% in Q3, 15.22% in Q2, and 15.91% in Q1, according to figures released by the Bank of Greece. It was the tenth consecutive quarter of double-digit house price growth.
When adjusted for inflation, urban house prices rose by 7.31% y-o-y in Q1 2024.
On a quarterly basis, house prices in Greek urban areas increased by 2.4% (2.76% in real terms) in Q1 2024.
Despite the strong growth, Greek house prices remained relatively lower than most of European countries - attracting many foreign investors into the country.
"Real estate prices in Greece remain lower compared to many countries abroad, which acts as a magnet for foreigners who are not only looking to secure returns, but also wish to relocate to a popular tourist destination. At the same time, Americans' and Britons' goal of securing visas has dramatically strengthened the demand from these countries," said Kosmas Theodoridis, the president of the European Real Estate Brokers Association.
Greece's house price annual change
House prices continue to rise strongly in major cities:
- In Athens, Greece's capital city, house prices rose by 9.35% (5.94% in real terms) in Q1 2024 from a year earlier, a slowdown from the prior year's huge growth of 17.39%. During the latest quarter, house prices were up 2.58% (2.93% in real terms).
- Thessaloniki, the country's second-largest city, led the house price growth of 12.19% (8.69% in real terms) in Q1 2024 from a year ago, its eighth straight quarter of y-o-y growth. Quarter-on-quarter, prices increased by 2.35% (2.7% in real terms) in Q1 2024.
- In other cities (excluding Athens and Thessaloniki), house prices rose by 10.28% (6.8% in real terms) in Q1 2024 from a year earlier, following a 14.95% price growth in the same period last year. During the latest quarter, prices increased slightly by 0.65% (1% in real terms) in Q1 2024.
Demand from foreign homebuyers is rising strongly. During 2023, the total value of real estate purchases by foreign buyers, which accounts for about 80% to 85% of all real estate purchases in Greece annually, soared to an all-time high of €3 billion, following annual increases of 68% in 2022 and 34.4% in 2021.
Foreign investors have been attracted to Greece, mainly due to the Golden Visa Program, which offers residency to non-EU investors purchasing or renting property worth over €250,000. However, in August 2023, the cost of a Greek Golden Visa was doubled to €500,000 in the most popular areas of the country. The plan is valid for five years and is open to renewal.
The move seems to have negligible impact in increasing the affordability of real estate for Greeks and in discouraging foreign investors. Five months after the policy change (i.e. August-December 2023), a total of 3,626 investors have submitted their Golden Visa applications, up by around 60% from the same period in 2022.
As such, the government announced recently that effective August 31, 2024, the investment requirements for the Golden Visa program will increase further to €400,000 for areas that currently require a real estate investment of €250,000 and to €800,000 for those that currently require an investment of €500,000.
Following a strong post-pandemic recovery, the overall economy is now slowing. During 2023, the Greek economy grew by a modest 2% from a year earlier, a sharp slowdown from annual expansions of 5.6% in 2022 and 8.4% in 2021. Yet, it remains well above the country's long-term growth and the euro area average, according to the European Commission. Last year's growth was mainly driven by private consumption, investment in construction, and net exports.
Greece's economy is expected to remain healthy in the medium term, with projected real GDP growth rates of 2.2% this year and another 2.3% in 2025.
Foreign interest in Greek tourism real estate surging
The property market accounts for about 20% to 35% share of total FDI in Greece annually. During 2023, net foreign direct investment (FDI) for the purchase of real estate rose by 8% y-o-y to €2.13 billion, following annual increases of 68% in 2022 and 34.4% in 2021 and a decrease of nearly 40% in 2020. It is now the highest level recorded in more than two decades.
But even before the Covid-19 pandemic, foreign investment in real estate in Greece had been rising strongly. Net FDI for real estate surged by 45.3% in 2016, 86.5% in 2017, 172.1% in 2018, and another 28.5% in 2019.
According to an Ernst & Young investment report, Greece remains resilient and attractive to foreign investors, despite the uncertainty of the international environment. Part of this is due to the Golden Visa Program. The Golden Visa program was launched in 2013 to revive the housing market from a prolonged slump. It offers residency to non-EU investors purchasing or renting property worth over €250,000, similar to Hungary, Spain, and Portugal. However, in August 2023, the cost of a Greek Golden Visa was doubled to €500,000 in the most popular areas of the country. The plan is valid for five years and is open to renewal.
The increased real estate investment requirement was applied to the northern part of the Hellenic Republic, the central and southern sectors of Athens in the Attica region, and the islands of Mykonos, Santorini, and the Municipality of Thessaloniki.
The move seems to have negligible impact in increasing the affordability of real estate for Greeks and in discouraging foreign investors. As such, the government announced recently that effective August 31, 2024, the investment requirements for the Golden Visa program will increase further to €400,000 for areas that currently require a real estate investment of €250,000 and to €800,000 for those that currently require an investment of €500,000.
From 2014 to 2021, 9,610 main applicants received their Golden Visa in Greece. Then from 2022 to 2023, a total of 6,795 main applicants were approved. From its inception to 2023, over 31,000 Greek Golden Visa permits were granted to the main applicants and their dependents, which yielded a total investment of more than €2.6 billion into Greece.
From 2014 to 2023, the highest number of applicants came from China, with a total of 7,186 visas approved which is equivalent to about 63.6% share, followed by Turkey (8.1%), Russia (6.7%), Lebanon (5.2%), and Egypt (3.7%).
In the first four months of 2024, there were 2,664 Golden Visa applications - at par with the previous year's 2,632 applications.
Measures to boost the housing market
Aside from the Golden Visa program, several other measures introduced by Prime Minister Kyriakos Mitsotakis have buoyed the housing market recently:
- Suspension of VAT payments on new building permits: Mitsotakis announced in October 2019 a suspension of VAT payments on any new building permits and unsold properties built after January 1, 2006. The suspension originally runs from December 12, 2019, to December 31, 2023. But in September 2022, Mitsotakis announced an extension of the tax relief for another year - until the end of 2024.
- Tax relief for real estate: the government ended real estate tax in 26 islands in 2020.
- Reduction of the single property tax (ENFIA): The ENFIA for individuals was reduced in 2019 - 30% reduction for properties valued up to €60,000; 27% for those valued up to €70,000; 25% for those valued up to €80,000; 20% for those valued up to €1 million; and 10% for properties valued more than €1 million. A further 10% reduction, on average, was applied to all property owners from the year 2020. Then in February 2022, Mitsotakis announced a new 13% reduction in the ENFIA.
Starting from 2022, the main rates of the new ENFIA are as follows:
| Property zone rates | Old ENFIA | New ENFIA |
| €751 to €1,500 | €3.70 per sq. m | €2.80 per sq. m |
| €1,501 to €2,500 | €4.50 to €6 per sq. m | €3.70 per sq. m |
| €2,501 to €3,000 | €7.60 per sq. m | €4.50 per sq. m |
Moreover, the new system expands the 30% ENFIA discount for properties up to €100,000 euros each and the 25% discount expands to properties of €100,001 to €150,000. The new law also provides for the payment of the single property tax in up to 10 interest-free monthly installments, up from six tranches in 2021.
"Under the new rules eight out of ten property owners will pay an even lower rate," PM Mitsotakis said. "A fair share will pay the same contribution, while a small minority, around 6 percent, will see a reasonable increase."
High property taxes had discouraged many potential buyers because property taxes had increased seven times since the global financial crisis.
Reducing taxes has been one of the priorities of the Mitsotakis government.
Housing boom and bust
Greece had a great house price boom during the early-2000s. Real estate agents reported 30% to 40% annual price rises for properties near the sea in 2004. In Athens, house prices rose 11.2% in 2006, before slowing to 6.2% in 2007.
When Greece's dramatic economic crisis hit, residential property prices began falling dramatically. Between 2007 and 2017, Greece's GDP per capita fell by a quarter, and house prices in Athens fell by 44.5% (-49.5% in real terms).
Here are the house prices in Athens in the past 16 years:
| ATHENS HOUSE PRICE INDEX, ANNUAL CHANGE (%) | ||
| Year | Nominal | Inflation-adjusted |
| 2008 | -0.77 | -3.57 |
| 2009 | -4.21 | -6.04 |
| 2010 | -5.83 | -10.40 |
| 2011 | -8.00 | -10.49 |
| 2012 | -12.91 | -13.88 |
| 2013 | -11.45 | -9.47 |
| 2014 | -6.80 | -5.04 |
| 2015 | -4.99 | -4.41 |
| 2016 | -0.91 | -0.47 |
| 2017 | -0.45 | -1.27 |
| 2018 | 4.67 | 3.53 |
| 2019 | 11.86 | 11.75 |
| 2020 | 6.23 | 8.45 |
| 2021 | 11.61 | 6.86 |
| 2022 | 16.90 | 7.97 |
| 2023 | 10.93 | 7.35 |
| Sources: Bank of Greece, Global Property Guide | ||
Greece finally emerged from the recession in 2017 - growing by 1.1% in 2017, 1.7% in 2018, and by 1.8% in 2019.
The housing market started to recover in 2018, having fallen 42.5% (-47.7% in real terms) from 2007 to 2017. House prices in urban areas rose by 3.51% in 2018 and by another 7.46% in 2019. Athens had even stronger house price growth of 4.67% and 11.86% over the said two years.
And, despite the fact that the pandemic dragged the economy back to recession, with real GDP shrinking by a huge 9.3% during 2020, the housing market remains resilient. House prices in Athens rose by 6.23% (8.45% in real terms) y-o-y in 2020.
Fortunately, the overall economic conditions have since improved, with the economy growing strongly by 8.4% in 2021 and another 5.6% in 2022, mainly driven by the easing of pandemic-related restrictions and the low-base effect from the prior year.
As such, house prices in Athens soared by 11.61% (6.86% in real terms) in 2021 while prices in urban areas increased by 10.81% (6.09% in real terms) over the same period. In 2022, house price growth in Athens accelerated to 16.90% (7.97% in real terms) and to 15.05% (6.26% in real terms) in urban areas.
During 2023, the housing market continued to grow strongly. House prices in Athens surged 10.93% (7.35% in real terms) and by 12.48% (8.85% in real terms) in urban areas.
Rapid urbanization has led to a sharp dichotomy between urban and rural areas. Accordingly, more than 35% of the housing stock is vacant, mostly in rural areas. These units are typically dilapidated, or in need of total rehabilitation.
On the other hand, dwelling units in urban areas are amongst the most crowded in Europe. Most children continue to live with their parents after they enter adulthood. The reduction of notary fees from 1.2% to 1% of real estate's value was clearly insufficient in reducing the high transaction cost, which adds to the burdens of first-time homebuyers.
Gross rental yields and rents falling
Gross rental yields in Greece fell to an average of 4.82% in Q1 2024, down from 5.22% in Q3 2023, according to a Global Property Guide research conducted in March 2024. In central Athens, specifically Athens Historical Center and Kolonaki - Lykavittos, gross rental yields ranged from 2.87% to 8% in Q1 2024, with a city average of 5.42%.
Smaller apartments tend to have higher rental yields than larger ones.
Rents have been generally falling in the past decade. From 2010 to 2023, rents in Greece plunged by about 19%, the worst performance in the European Union, according to the Eurostat. Among the 27 EU member states, only Greece recorded rent declines over the period.
Currently, the monthly rents for two-bedroom apartments in Athens range from €650 to €1,770, based on the Global Property Guide research. In Thessaloniki, a similar apartment rents for about €450 to €650 per month.
Around three-fourths of Greeks live in owned homes, with a homeownership rate of 72.8% this year, down from 73.3% in 2022, 73.9% in 2021, and 75.4% in 2020, according to Eurostat. The rental market comprises about 20% of the dwelling stock.
Mortgage interest rates rising
Mortgage interest rates in Greece are now rising, following the move of the European Central Bank (ECB) to hike its key rates successively in the past two years to rein in inflationary pressures. In September 2023, the ECB raised its repo rate further by 25 basis points to 4.50%, its tenth consecutive rate hike since July 2022, when the repo rate was at a record low of 0%. The key rate was unchanged since.
As a result, the average interest rate for new housing loans rose to 4.33% in April 2024, up from 3.88% in the previous year and 2.83% two years ago, according to the Bank of Greece.
For new housing loans with a floating rate or up to one-year initial rate fixation (IRF), which accounts for more than 63% of all new housing loans drawn this year, the average interest rate was 5.11% in April 2024, up from 4.06% in April 2023 and 2.4% in April 2022. Since the second half of 2009, 60% or more of new housing loans have had interest rates adjustable at least annually.
For new housing loans with IRF of over 5 and up to 10 years, the average interest rate increased to 4.12%, up from 3.66% a year earlier and 3.02% two years ago.
For outstanding housing loans with a maturity of 1-5 years, the average interest rate increased to 5.46% in April 2024, from 4.67% a year ago and 3.92% two years earlier. Likewise, the interest rate for loans with maturity of over 5 years increased to 4.4%, from just 4.38% in the previous year and 1.94% two years ago.
Residential mortgage market continues to shrink
The size of the mortgage market continues to shrink, amidst rising interest rates. During 2023, the mortgage market was estimated to have contracted to just about 12.7% of GDP, down from 14.2% in 2022, 16.9% in 2021, and 39.5% of GDP in 2012.
The mortgage market is poised to contract further to below 12% of GDP this year.
Since the global financial crisis, cash-basis property transactions have accounted for about 80% of all transactions with only 20% relying on bank loans, according to the Bank of Greece, resulting in a continuous decline in the size of the mortgage market.
During 2023, new housing loans fell by 10.4% y-o-y to €642 million, according to the Bank of Greece. This is far from the average of €14.17 billion new housing loans recorded annually in 2005-08 and €5.4 billion annually in 2009-13.
However, demand for housing loans has shown some improvements early this year, with the total amount of new housing loans drawn increasing by 37.7% to €172.5 million in the first four months of 2024 as compared to the same period last year.
Despite this, total housing loans outstanding still declined by 5.9% to €27.24 billion in April 2024 from a year earlier, following annual declines of 4.4% in 2023, 3.7% in 2022, 33.3% in 2021, 12.6% in 2020 and 7.2% in 2019.