Greek house prices continue to accelerate, amidst strong demand from foreign homebuyers, growing residential construction activity, and continued economic growth in the country.

In Greece’s urban areas, house prices soared by 10.76% in Q1 2024 from a year earlier, following year-on-year increases of 12.48% in Q4 2023, 13.05% in Q3, 15.22% in Q2, and 15.91% in Q1, according to figures released by the Bank of Greece. It was the tenth consecutive quarter of double-digit house price growth.

When adjusted for inflation, urban house prices rose by 7.31% y-o-y in Q1 2024.

On a quarterly basis, house prices in Greek urban areas increased by 2.4% (2.76% in real terms) in Q1 2024.

Despite the strong growth, Greek house prices remained relatively lower than most of European countries – attracting many foreign investors into the country.

“Real estate prices in Greece remain lower compared to many countries abroad, which acts as a magnet for foreigners who are not only looking to secure returns, but also wish to relocate to a popular tourist destination. At the same time, Americans’ and Britons’ goal of securing visas has dramatically strengthened the demand from these countries,” said Kosmas Theodoridis, the president of the European Real Estate Brokers Association.

Greece’s house price annual change

House prices continue to rise strongly in major cities:

• In Athens, Greece’s capital city, house prices rose by 9.35% (5.94% in real terms) in Q1 2024 from a year earlier, a slowdown from the prior year’s huge growth of 17.39%. During the latest quarter, house prices were up 2.58% (2.93% in real terms).
• Thessaloniki, the country’s second-largest city, led the house price growth of 12.19% (8.69% in real terms) in Q1 2024 from a year ago, its eighth straight quarter of y-o-y growth. Quarter-on-quarter, prices increased by 2.35% (2.7% in real terms) in Q1 2024.
• In other cities (excluding Athens and Thessaloniki), house prices rose by 10.28% (6.8% in real terms) in Q1 2024 from a year earlier, following a 14.95% price growth in the same period last year. During the latest quarter, prices increased slightly by 0.65% (1% in real terms) in Q1 2024.

Demand from foreign homebuyers is rising strongly. During 2023, the total value of real estate purchases by foreign buyers, which accounts for about 80% to 85% of all real estate purchases in Greece annually, soared to an all-time high of €3 billion, following annual increases of 68% in 2022 and 34.4% in 2021.

Foreign investors have been attracted to Greece, mainly due to the Golden Visa Program, which offers residency to non-EU investors purchasing or renting property worth over €250,000. However, in August 2023, the cost of a Greek Golden Visa was doubled to €500,000 in the most popular areas of the country. The plan is valid for five years and is open to renewal.

The move seems to have negligible impact in increasing the affordability of real estate for Greeks and in discouraging foreign investors. Five months after the policy change (i.e. August-December 2023), a total of 3,626 investors have submitted their Golden Visa applications, up by around 60% from the same period in 2022.

As such, the government announced recently that effective August 31, 2024, the investment requirements for the Golden Visa program will increase further to €400,000 for areas that currently require a real estate investment of €250,000 and to €800,000 for those that currently require an investment of €500,000.

Following a strong post-pandemic recovery, the overall economy is now slowing. During 2023, the Greek economy grew by a modest 2% from a year earlier, a sharp slowdown from annual expansions of 5.6% in 2022 and 8.4% in 2021. Yet, it remains well above the country’s long-term growth and the euro area average, according to the European Commission. Last year’s growth was mainly driven by private consumption, investment in construction, and net exports.

Greece’s economy is expected to remain healthy in the medium term, with projected real GDP growth rates of 2.2% this year and another 2.3% in 2025.

 

Foreign interest in Greek tourism real estate surging

The property market accounts for about 20% to 35% share of total FDI in Greece annually. During 2023, net foreign direct investment (FDI) for the purchase of real estate rose by 8% y-o-y to €2.13 billion, following annual increases of 68% in 2022 and 34.4% in 2021 and a decrease of nearly 40% in 2020. It is now the highest level recorded in more than two decades.

But even before the Covid-19 pandemic, foreign investment in real estate in Greece had been rising strongly. Net FDI for real estate surged by 45.3% in 2016, 86.5% in 2017, 172.1% in 2018, and another 28.5% in 2019.

According to an Ernst & Young investment report, Greece remains resilient and attractive to foreign investors, despite the uncertainty of the international environment. Part of this is due to the Golden Visa Program. The Golden Visa program was launched in 2013 to revive the housing market from a prolonged slump. It offers residency to non-EU investors purchasing or renting property worth over €250,000, similar to Hungary, Spain, and Portugal. However, in August 2023, the cost of a Greek Golden Visa was doubled to €500,000 in the most popular areas of the country. The plan is valid for five years and is open to renewal.

The increased real estate investment requirement was applied to the northern part of the Hellenic Republic, the central and southern sectors of Athens in the Attica region, and the islands of Mykonos, Santorini, and the Municipality of Thessaloniki.

The move seems to have negligible impact in increasing the affordability of real estate for Greeks and in discouraging foreign investors. As such, the government announced recently that effective August 31, 2024, the investment requirements for the Golden Visa program will increase further to €400,000 for areas that currently require a real estate investment of €250,000 and to €800,000 for those that currently require an investment of €500,000.

From 2014 to 2021, 9,610 main applicants received their Golden Visa in Greece. Then from 2022 to 2023, a total of 6,795 main applicants were approved. From its inception to 2023, over 31,000 Greek Golden Visa permits were granted to the main applicants and their dependents, which yielded a total investment of more than €2.6 billion into Greece.

From 2014 to 2023, the highest number of applicants came from China, with a total of 7,186 visas approved which is equivalent to about 63.6% share, followed by Turkey (8.1%), Russia (6.7%), Lebanon (5.2%), and Egypt (3.7%).

In the first four months of 2024, there were 2,664 Golden Visa applications – at par with the previous year’s 2,632 applications.

Source: www.globalpropertyguide.com