Galloping Greek property prices seen slowing in 2022
Property prices in Greece are expected to keep rising in 2022 but at a slower pace than last year due an anticipated drop off in the country’s economic performance, experts say.
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Last year, Greece’s economy bounced by a forecast 7-8 percent, sending residential real estate prices some 6 percent higher in the first nine months of the year, according to official data from the Bank of Greece. On office space, prices jumped 3.2 percent in the first half of the year in Athens, versus gains of 0.7 percent in the previous six-month period, amidst low supply levels.
In 2022, however, Greece’s economy is tipped to expand by 5 percent that could result in housing prices rising at a slower pace of between 3 to 4 percent.
“Real estate prices often move in step with economic growth but trail GDP expansion by about 1-2 percent,” one market official tells Greekguru.net.
“This means that we could see price hikes of about 3 percent, or a bit higher, for 2022 though there are a series of other factors that also need to be taken into account, such as the strong momentum in the market right now, the infrastructure projects in progress and Greece’s expanding road and public transport networks,” the source added.
Market watchers point out that house prices are still some 30 percent behind highs seen in 2008, when Greece’s economy entered a ten year slump, indicating that they now have considerable room to move higher.
Government initiatives are also providing a boost to the home market. In December, officials indicated that Greece will extend the freeze of VAT tax on newly built properties until 2025.
On the downside, however, galloping prices, in some cases by some 25 percent, are squeezing out many Greeks from the market as income levels have barely budged in the same time period, while high energy and construction costs also keep a lid on demand.
Another area that experts are concerned about is the highly segmented demand for homes.
Buying interest is largely driven by foreign buyers with many deals being done in specific areas, such as the islands and central Athens, on better quality assets.
This needs to spread out to all segments of the sector to help support more balanced and sustainable growth, officials add.