In surprise jump, Greece sees spike in building activity despite soaring costs
Building activity in Greece shot up by nearly 100 percent in May with construction in western parts of the country picking up the most, data from the statistics office show.
The construction boom comes despite a sharp rise in the cost of building materials that is weighing heavily on markets, as seen in Cyprus, while in Italy the government has decided to subsidize infrastructure projects to avoid the risk of companies dumping the contracts.
In Greece, the Hellenic Statistical Authority said that total building activity, based on volume, reached 2.4 million cubic meters, up 97 percent from a year earlier. The highest growth rates were seen in Epirus (480 percent), in the north-west, and western parts of Greece’s mainland (259.7 percent). In Attica, where Athens is located, there was a 123 percent rise.
For the same month, the total number of building permits issued by authorities nationwide rose 62.9 percent to 2,222.
A recovering economy in Greece is helping fuel demand for homes as prices on some islands have gained as much as 26 percent amidst easing travel restrictions. Real estate agents say that buying activity from foreign nationals has mostly focused on southern Athens, along the coastal area called the Athens Riviera, and the islands.
Among the recent measures introduced by the Greek government that have helped push the real estate market - and prices - higher is the suspension of VAT payments on new building permits and unsold properties built after January 1, 2006 and a reduction of the single property tax (ENFIA).
The rising cost of building materials is causing major headaches for the industry that is seeing a post-pandemic boom globally, raising fears of bubble markets emerging in Europe and elsewhere in the world. In the first quarter of the year, housing prices in Turkey recorded the highest gains in the world, jumping 32 percent.
The cost of basic construction materials, such as copper and timber, have soared by as much as 70 percent since the start of the year on the back of an improving global economy. In Cyprus, building officials estimate that the cost of constructing a home has risen some 20 percent recently, with some builders refusing to complete contracts unless they are covered for the price hikes.
Meanwhile, in Italy, the government is putting aside 100 million euros to help building firms working on public projects as construction costs go through the roof.