Real estate: Stoves made of… gold – Prices for new housing construction are dizzying – Why are they increasing?

Without a brake, their rally continues increases on the domestic real estate market, with sale prices residence an increase of 53.8% nationally and 71.1% in Attica, from 2017 to the second quarter of 2023, when in European Union according to the latest data, it reaches 46%. Eurostat.

A key factor in the rapid rise in property prices is the cost of construction and energy.

For example, construction costs from €1,000/m2. -1,200 EUR/m2. (without land) now reaches €1,500/m2. -1,700 EUR/m2, i.e. an increase of 50%-60%.

The main reasons for the increase in the selling prices of houses:

Increase in construction costs

The costs of materials and energy burdened the construction and thus the final billing of the property. The increase in construction costs even reaches 50%.

Increase in sales prices / Counter-provision of land

From 2018 to today, both the starting sale prices of land and the required percentage of compensation have increased significantly.

High demand / investment interest

Foreign investment in Greek real estate increased by 39% in the first half of 2023 compared to the same period last year. It is worth noting that in 2022 specific investments reached 2.1 billion euros, 68% more than in 2021.

At the same time, investments in real estate of 9 real estate investment companies (AEEAP) amounted to 4,603.4 billion euros at the end of June from 4,430.8 billion euros in December 2022, which represents an increase of 3.9%.

AEEAP started with 471 properties in 2018 and reached 655 in 2022 (38.4% increase). The biggest increase (19.7%) occurred between 2018 and 2019 (from 471 properties to 564), while the FFO index increased by 41.6%, from 76.46 million to 108.1 million euros.

Tourism / Returns

A boom in the tourism industry coupled with investment opportunities in the domestic real estate market due to the announcement and falling prices has attracted returns from investors focusing on both residential and tourist properties.

Inflation / Zero deposit rates

One of the main savings tools for Greek depositors after the country’s entry into the eurozone is being cancelled. We are talking about term deposits which, according to the banks, have no reason to exist anymore after their yields have shrunk to just above 0%. A fact which, coupled with a rapid increase in inflation, seems to have fueled the real estate market with funds from those looking for safe investments and returns.

Sale prices of newly built houses in Attica, Thessaloniki

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