Surprisingly strong growth in Athens property prices

Property prices in Athens soared by nearly ten per cent in the third quarter of the year, according to the latest batch of data, as Greece’s real estate sector proves to be one of the strongest in Europe.

Figures released by the Bank of Greece on Tuesday showed that the average price of apartments in the July to September period jumped 7.9 per cent for the year. Momentum in the market is picking up, in line with advancing economic growth, as property prices in the second quarter of the year gained 6.2 per cent and 4.3 per cent in the first three months of 2021.

In the third quarter period, demand for older homes (more than five years old) proved to be strongest, pushing prices 8.2 percent higher. This compares with gains of 7.6 percent for newer apartments (less than five years old). The big winner though was Athens where prices leapt by 9.8 percent, followed by Thessaloniki (8.7 percent) and other cities (5.9 percent).

In the Greek capital, demand for homes has spilled over recently from areas such as central districts, around the Acropolis, and southern Athens to just about all part parts of the city.
Greece’s recovering economy, forecast by the government to expand at a rate of around 7 percent this year, is driving growth in real estate where prices had tumbled by more than 40 percent during the country’s ten-year economic crisis.

Increased lending from the country’s banks is supporting demand as a series of tax incentives introduced by the government (ie ENFIA property tax cut, suspension of VAT payments on new buildings) is also encouraging buying activity.

Experts also point out that accumulated savings arising during the pandemic, due to lockdowns and restrictions on going out, are being channelled into homes.  With more savings put aside, households have been able to put down larger deposits.

Advancing property markets is a trend seen across Europe, even raising concerns of bubble markets emerging in some capital cities, such as Amsterdam.

Second-quarter data from Eurostat shows that property prices in the European Union increased by 7.3 per cent, with a handful of countries showing double-digit growth (eg. Denmark, Germany, Estonia) while in other states gains were limited to below 6 per cent, such as in France, Spain and Italy.

In Europe, credit rating agency S&P expects the rise in housing costs to continue over the next four years as the supply of new housing is not able to keep pace with structural demand.