Less buying and selling and “brake” on price increases looks like it will be the new “regime” in the housing marketat least based on the conditions that have started to develop since the beginning of the year.
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This is a “healthy” development, especially if both new-build and second-hand home values stabilize after the frenzied growth rate of 2021-2023.
Based on the price indices of the Bank of Greece (BoG), during these three years the sales prices of houses in Attica increased by almost 40% on averagewhile in areas of high demand, such as the northern and southern suburbs, as well as the center of Athens, the increases are estimated to have been even higher and even approached 50%-60% for the best quality properties.
This is a leap which, as it is now becoming apparent, is increasingly difficult for interested buyers to follow, especially those from the domestic market.
This difficulty has already intensified since the end of 2022 and due to the change in monetary policy and the jump in lending rates, in combination with the policies of domestic banking institutions, which have maintained at a very strict level the criteria for granting mortgage loans.
40% on average the increase in the selling prices of houses in Attica
As real estate market executives explain, an average Greek household is not able to finance e.g. 50%-60% of the value of a property, that is to have available liquidity of the order of 100,000 euros for a house that costs 200,000 euros.
Recently, in fact, the Bank of Greece hastened to change its guidelines for banks, thereby sending a “message” to the market that new mortgage lending should be strengthened.
Based on the latest available figures from the Bank of Greece, existing mortgages granted by banks have financed 61.6% of the value of the homes, but almost 1 in 3 loans concern financing at a rate of less than 50% of the value of the property acquired.
Accordingly, based on the approvals given, the monthly installment does not exceed 24.2% of the borrower’s income, a percentage that is considered very low.
Changes from 2025
This is also confirmed by the recent decision of the Bank of Greece, according to which the funding limits are set at a much higher level.
Specifically, from 1/1/2025 banks will be able to finance up to 80%-90% of the value of the residencewhile they will allow installments of up to 40%-50% of the borrower’s annual income, i.e. almost twice the current level granted by banks.
Of course, this does not mean that all of a sudden every loan should reach the maximum permissible limit, but it is an invitation to relax the credit criteria.
1 out of 3 loans concerns financing at a percentage of less than 50% of the value of the property
In fact, the Central Bank states that these should be more flexible for new borrowers compared to existing ones. In his recent analysis of the housing market, Ilias Papageorgiadis, head of the MORE Group of companies, stated that “buyers do not seem willing or finding a way to follow the crazy pace of price increases.
In 2023, the program “My house”, despite its good intentions, had the effect of artificially increasing the demand for old properties. Removing from the equation this distortion, which was also created without easy access to bank loans, it seems that those interested in buying a property up to 350,000 euros, which are the great majority, seem to be noticeably more restrained from the beginning of 2024 and until today”.
According to him, the Greek reality today is that the banks are more “tight than they advertise”, while the number of natural persons who are creditworthy should not exceed a few hundred thousand (and most of them have no reason to request a loan).
But even if one manages to secure a mortgage, the interest rates are high. These reasons explain the decrease in demand for housing purchases since the beginning of the year. An exception to the above will be the purchases and sales that will have been made until the end of August by investors from third countries, through the “Golden Visa” program.
The new changes, with the increase of the minimum investment limit to 800,000 euros, have mobilized investors for the second consecutive year, as it has been realized that the program is moving towards its “implicit” end, which means that the “window” is also closing » for new markets once the planned changes take effect.
This is scheduled for September 30 this year, unless the proposal tabled by the opposition to speed up the “grace period” is adopted.
*Published in the “Money Pro” insert of the “Parapolitika” newspaper on 04/20/2024
