Investment in houses shrinks
Residential market fails to attract sufficient capital, while mortgage loans are also in decline
The housing market is running out of steam, as for a third consecutive quarter, investment has been declining.
After the activation of the measures to tighten conditions for obtaining a Golden Visa, concerns are growing about the possibility of a further decrease, while efforts turn to raising mortgage issues, which are also at extremely low levels.
The government will seek to inject money into the market through subsidized MyHome loans, while banks are relaxing lending conditions, albeit age-based, as the current house price-income mix makes lending practically impossible for the majority of prospective property buyers.
Of all the indicators used to monitor the course of the real estate market, only one has returned to pre-crisis levels: the price index. Its rally has not been followed by growth in residential investments, which actually recorded a decline in the first quarter of 2024, as a result of which they now amount to only 13-14% of the total investments made in the country. Before the crisis – i.e. in 2006-2008 – they even reached 36% to 42%.
The inability to rekindle investment interest in real estate is troubling, as on the one hand the country’s housing problem is flaring up – the continued increase in demand for housing is not matched by supply – while the desired increase in investment has not been achieved. Also, as long as the rise in real estate prices continues without similar growth in investment interest, the chances increase that a price decline cycle will begin once again in the real estate market.
The figures of the Hellenic Statistical Authority on the course of GDP in the first quarter show that of the total investments (gross fixed capital formation), which reached 7.37 billion euros in the first quarter, only €984 million (approximately 13.34%) concerned residences. While overall investment moved up in the first quarter by a rate of 6%, real estate investment fell by 12%. The reduced interest is also reflected in the granting of housing loans, which are limited to €100-130 million per month.
