Greece house prices up 4.6 pct; upward trend seen continuing in 2021

Property prices in Greece advanced by 4.6 percent in the second quarter of the year on the back of improving economic conditions in the country with demand for homes strongest in Athens, according to data from the Bank of Greece, the country’s central bank.

The latest price gains come after a 3.5 percent increase in the first quarter of 2021 in a trend many see as continuing for the remainder of this year, and next due, to a strong rebound in the broader economy.

The Athens housing market outperformed, with prices rising 6.4 percent in the second quarter of the year, versus gains of 5.6 percent in the first three-month period. The cost of buying a home in Thessaloniki, northern Greece, also increased by 4.1 percent (versus 3.8 percent in Q1).

A string of changes introduced to the property market by the Greek government recently have helped spur growth in the sector. These changes include placing more property transfer procedures online and reductions to the ENFIA property tax, experts say.

However, the key factor driving prices higher is the upturn in the economy after it contracted sharply last year due to the pandemic and several lockdowns.

Data released by Greece’s statistics office earlier this week shows that the Greek economy powered ahead by an annual pace of 16.2 percent in the second quarter of the year, better than economists expected.

Improving sentiment among consumers and investors is support the positive momentum in the property market as bank lending to the sector also picks up.

Senior bank officials told that housing price hikes are seen moving in step with the GDP growth rates. For 2021, economists have been revising their forecast on Greece upwards tipping an expansion rate of around 5-6 percent. For next year, the figure is seen coming in at a similiar pace.

On the downside, however, risks to the real estate market in Greece remain, including uncertainty stemming from the pandemic and weak job market conditions that harm the ability of households to sign up for new mortgages.

A further breakdown of the second quarter figures show that price hikes for new apartments (less than five years old) reached 4.7 percent, and 4.6 percent for older homes.

Beyond the country’s two biggest cities, apartment prices rose 3.2 percent in the rest of the country, versus an increase of 1.6 percent, in the first three months of the year, the data adds.