Upward cycle in housing market may soon fizzle
Residential property in Greece has been rebounding in the last 18 months. Buying (from Greeks and foreign investors) has helped lift prices across the country but this upward cycle could be soon coming to an end, unless something changes in the economy.
The supply of homes currently in demand is fast drying up. Most of the deals being done involve cheaper apartments up to 110 square meters, points out a survey from E-Real Estates.
A key driver of the rebound are investors looking to get a cheap place in area popular with tourists that they can put on a short term rental platform, like Airbnb.
Eight in ten deals in Greece involve investors, says the survey. Only two in ten are from individuals who want to cover their housing needs.
In the first quarter of the year there was interest from buyers but not many deals due to a low supply of homes that are in demand, adds the survey.
This indicates that demand needs to shift, or broaden, in order for the market to keep heading higher and enter its next growth phase. Otherwise, it faces the risk of prices flattening out, or even heading southwards.
But how can demand improve and shift to higher priced assets if economic conditions are the same? There needs to be a change to one of the many moving parts.
This could be in the form of stronger economic growth, improved bank lending or a cut in property tax.
Anything that will help shift demand to the supply of homes currently on the unwanted pile. And make investors more confident in taking on additional risk.
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