Real estate drives spike in demand for bank loans
Demand for loans from households in Greece rose considerably in the last quarter of 2018 driven by improving prospects in the real estate sector, according to the Bank of Greece, the country's central bank.
In a quarterly assessment of Greek bank lending, the central bank pointed out that the increase was higher than expected.
"The demand for housing loans increased due to the better prospects of the real estate market, while the demand for consumer loans increased because of improved consumer confidence and the need to finance purchases of consumer durables," it said in a statement.
"Banks expect that credit standards and demand for loans to households to remain unchanged during the first quarter of 2019," it added.
The increase in demand for loans is in step with improving economic conditions in Greece though growth remains sluggish. Greece's real estate market is showing increasing signs of recovery after prices crashed by more than 40 percent during the country's eight year economic slump. In 2018, residential real estate prices rose for the first time in ten years.
The tourism sector is helping fuel demand for properties with sharp growth recorded in the number of apartments being put up across the country for short term rentals on different platforms, such as Airbnb. The hospitality sector is also driving demand for commercial real estate assets in Athens and popular islands, such as Mykonos and Crete.
Despite lenders recording an increase in demand for money to buy real estate, this did not lead to more mortgages being offered to households. The Bank of Greece said the rate at which loan applications for loans were rejected also increased in the last three months of last year.
This contrasts with comments from senior bankers that credit expansion in Greece remains in negative territory due to low demand for credit. Economists anticipate that loan growth to the private sector will remain in negative territory until the end of the year.
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