Real Estate Market at Different Speeds – What the Bank of Greece Considers a Correction |

In the interim monetary policy report, the Central Bank of Greece talks about property purchases at a different pace as it calls for a price correction in those properties with lower demand utilization and positions. However, the bank’s expectations for the entire real estate market remain slightly positive, as specific categories of real estate attract strong investment interest and the high-end market segment continues its upward trajectory. In any case, the pace of price growth is expected to moderate, with the central bank stressing there is no room for complacency on the medium-term property outlook.

As noted by the Central Bank of Greece, the Greek real estate market attracted significant investment interest in 2023, despite the negative developments in the international environment and the uncertainties resulting from the increasing geopolitical instability during the last two years.

Real estate prices continued their upward trend as increased demand from abroad and domestically for quality real estate is not met by the current limited supply and maintained high growth rates, albeit more modestly than in previous quarters. However, preliminary indicators related to the domestic market, as well as price developments at European and international level, may point to an imminent period of price correction, especially for uses, properties and properties(1) in lower demand locations. emphasizes the Bank of Greece.


In the housing market, strong housing price growth continues through Q3 2023, although some price indexes have slowed in the past two quarters. Based on assessment data collected by the Bank of Greece, house prices (in nominal terms) increased by 13.9% year-on-year in the first nine months of 2023, compared to an increase of 11.2% in the same period in 2022. local levels, house prices show heterogeneity in terms of their changes, with a significant increase especially in locations with strong investment interest and smaller changes in others. High rates of price growth in most of the country’s urban areas contributed significantly to home price growth across the country in the first nine months of 2023.

Specifically, the highest growth rates were recorded in Thessaloniki (16.5%), Athens (14.5%) and other major cities (14.1%), while the growth rate was more moderate in other regions of the country (11.1%). The prices of old apartments (older than 5 years) grew in the same period at an average annual rate of 14.4% compared to 13.1% for the prices of new apartments.


Despite the current uncertainty, the housing market maintains its dynamism and is characterized by strong, especially investment, demand and low supply. The positive course of tourism and short-term rentals, preferential housing programs for young people and increased interest of foreign investments in the purchase of real estate, including the Golden Visa program, continue to strengthen the dynamics of the market, which is also evidenced by other relevant indicators.

Specifically, in the eight months of 2023, construction activity for residences (ELSTAT data) recorded positive year-on-year changes both in terms of the number and volume of new permits for the construction of residences at the country level (22.5% and 14.5% respectively), namely quite strongly. against a slight decrease in the same period of the previous year (-1.3% and -4.1%). Housing investment (seasonally adjusted ELSTAT data, at constant prices) across the country is growing strongly by 40.2% year-on-year in the first nine months of 2023 (compared to 12.1% in the same period in 2022), although it is still at a very low level as a percentage of GDP (2.0%). At the same time, positive business expectations for the construction of single-family homes (IOBE data) are further strengthened by 13.3% on an annual basis in the eleventh month of 2023.

Despite the increased interest in residential real estate, bank financing is at low levels, with the total volume of new housing loans recording a year-on-year decrease of 4.9% in the tenth month of 2023. Finally, in the first nine months of 2023, the year-on-year increase in total construction costs of new residential buildings (ELSTAT data) continued by 6.7%, partly contributing to the strengthening of housing prices, according to the Progress Report.

Commercial real estate

In the commercial real estate sector, high-end office prices rose by 6.6% year-on-year in the first half of 2023, while high-end shop prices rose by 6.9% in the first half of 2023, according to data compiled by the Bank of Greece. In Athens, the corresponding growth rate of office prices was higher (7.2%), while a large increase was also recorded in the rest of Greece (7.3%) after a long period of relative price stagnation. Conversely, in Thessaloniki, after two consecutive six months of high growth rates, a slight price correction was recorded compared to the previous year (-0.5%).

As for high-end stores, the first half of 2023 saw significant positive annual rates for price indices in Athens (8.4%) and Thessaloniki (9.8%), while the corresponding rate in the rest of Greece was 3.7%. . Finally, in the same period for the entire republic, rents for offices and shops recorded a year-on-year increase of 5.6%.

Construction activity in the area of ‚Äč‚Äčcommercial real estate (ELSTAT data) recorded positive rates of change as a whole in the eight months of 2023, with individual categories presenting a mixed picture. Specifically, there was an increase in the number of new licenses for offices (75.2%), while the corresponding total volume (in cubic meters) was reduced by 15.9% compared to the corresponding eight months of 2022. New licenses for hotels decreased by 15.6 %, while the volume decreased by 8.0%. Last but not least, an increased volume of construction activity for shops (226.9%), but slightly positive in terms of the number of new permits (7.8%), was recorded. It is reported that the mixed picture of construction activity is probably related to conditions of excess demand in an economic environment that is not particularly favorable for the initiation of new projects. It is also related to the small, in absolute terms, number of new building permits per category, leading to large percentage variations, when in reality the variations are small.

real estate investment

Based on the data collected by the Bank of Greece and the results of the commercial real estate market survey, in the first half of 2023 the funds of real estate investment corporations (AEEAP) and other investment portfolios and development companies were mainly focused on the purchase or development of high-standard office space, especially with modern bioclimatic properties. Hotels, professional warehouses and special-use investment housing also attracted significant capital. Prime office minimum yields in the most commercial parts of the capital city center ranged between 5.5% and 6.6%, roughly the same as in the previous half-year, while prime retail yields in most commercial locations in central Athens ranged between 5.3 % and 6.0%.

Market prospects

Expectations for the next period remain slightly positive, under the influence of international developments and the environment of high inflation, increased interest rates and uncertainty, which directly affect Europe and the global economy as a whole, the BoE emphasizes. However, the change in demand characteristics that began during the pandemic period continues today, with specific property categories and locations attracting disproportionately high investment interest, reinforcing the image of the market at varying speeds. If demand from abroad is maintained and the supply of quality properties remains limited, it is estimated that prices will continue their upward course in the high-end segment of the market and pull prices up in the secondary markets as well. Rates of price growth are expected to moderate, but the current situation does not allow investors to be complacent about the medium-term development of market conditions, the BoE concludes.

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