ATHENS – The average share of household disposable income directed toward housing expenses – rent or loan repayments – in Greece reached 23.7%, compared to an EU average of 17.9%. This is highlighted in the report by the Governor of the Bank of Greece, Yannis Stournaras, based on OECD data. The picture becomes more dramatic based on Eurostat data.
According to Eurostat, the percentage of the population that spends more than 40% of its disposable income on housing costs (housing cost overburden rate) in Greece reached 28.9% in 2024, while the corresponding European average is estimated at 8.2%.
It may seem surprising, but prosperity itself is one of the reasons housing costs are rising. The gradual improvement in disposable income in recent years has strengthened domestic demand. Households are seeking modern housing for purchase or rent, particularly in areas that meet higher standards of infrastructure and residential quality. At the same time, the easing of internal uncertainty that characterized the period of the economic crisis, along with the steadily upward trajectory of the real estate market since 2018, has increased the attractiveness of housing as an investment, both for individuals and for companies involved in real estate development, management, and exploitation.
The strict lending conditions imposed on households after the financial crisis, aimed at safeguarding the stability of the banking system, combined with rising interest rates during 2022-23, negatively affected demand for new loans. However, in 2023 and especially in 2024, there was an annual increase in the number of new housing loans granted by credit institutions – 3.9% and 29.6% respectively – to which the ‘My’ Home program also contributed.
Despite the fact that the country’s population is declining both overall (-3.1%) and locally in most regions, the number of single-person households is increasing in all areas, and in Attica in particular, where the recorded population decreased slightly.
At the same time, alongside domestic demand, external demand for high-specification residential properties has also increased. Foreign direct investment in real estate, and especially the Golden Visa program, has removed available properties from the primary residence market. At the same time, the strong growth of tourism in urban centers and the expansion of short-term rentals have pushed up rents and property values in tourist areas.
Despite strong demand for housing, a number of factors are restraining the supply of new residential properties.
Construction activity for housing, which experienced historically high growth rates during 2001-08, declined sharply during the financial crisis, and the gradual recovery after 2020 remains insufficient.
The sharp increase in construction costs after 2021 – initially due to disruptions in global supply chains and subsequently due to geopolitical instability affecting energy and material costs as well as project financing – has limited the momentum of construction activity. Development plans for new properties were postponed or revised, while the additional construction costs drove up the prices of newly built homes.
In addition to the lag in the supply of new housing, constraints are also observed in the availability and suitability of the existing housing stock. A large portion of the available stock is old, outdated in specifications, and of low energy efficiency. In areas with low demand or degraded characteristics, exploitation often yields a negative net return, discouraging owners from renting out vacant properties on a long-term basis. Finally, in many cases, fragmented ownership – characterized by fighting among family members – makes decision-making for any form of development difficult.
Property transfers, especially of older properties, are significantly affected by the complexity of procedures as well as institutional and administrative delays, resulting in a significant number of homes remaining off the market until legal and technical issues are resolved. With the digitization of many public services and targeted legislative measures, several steps have been taken toward simplifying procedures, but delays still persist.
Among the factors negatively affecting property supply must also be added the delay in organizing the registration of real estate assets. With the completion of the Cadastre and related digitization projects, it is expected that market transparency will improve and bureaucracy will be reduced.