The rapid increase in rents and in general the cost of housing is a major topic of discussion and consideration for most Greek citizens, especially those living in large cities.
According to ESYE data, rents rose 5 percentage points above inflation in 2005 and 5.8 percentage points above inflation in the first quarter of 2006.
And that was just the beginning, which of course was interrupted at the time of the memorandum: From 2007 to 2011, rents increased by +15.20%, but from 2012 to 2017, a decrease was recorded, which reached -25.5%.
Increases returned in 2018 (+8.4%). In 2019, the rent growth rate reached +10% and in 2020 it ranged from 5.8% to 6.7%. The upward trend continued in 2021 from 3% to 7%, in 2022 it reached +10%, while an average increase of 6%-10% will be recorded this year.
Cumulative rent increases from 2018 to today will range from 43.2% to 52.1% for family-friendly housing. As Themistoklis Bakas, president of the Panhellenic E-Real Estates Network, points out for the Reporter, higher increases are mainly recorded in smaller properties suitable for students.
His numbers are revealing: Asking prices for student housing rentals have increased by 53% in Athens, while Patras is second on the list with an increase of 49.23% over the period 2017-2022. This year, a new increase of 12%-16% was recorded mainly in the student areas of Attica. The “big” social problem of housing costs will of course also affect us in 2024.
Reasons why rents have increased
Insufficient performance in previous years
A key reason for the rapid increase in rents is the accumulation of several years of housing underperformance, which led many landlords to sharply increase asking rents to limit losses from the recession years.
The role of banks
Since 2009, banks have stopped financing the housing market (400 million euros of new housing loans in the 10th month of 2019, when in 2005 the issuance of housing loans was 17 billion euros, in 2021 they reached 900 million euros and in 2022 they reached 1 .2 billion euros (the 2023 target is 1.5 billion euros), resulting in all construction activity coming to a standstill while demand remained stable.
At the same time, banking institutions now demand from the borrower 25-30% of the value of the property as a co-payment for providing a housing loan, and this at a time when, in the midst of monumental times, very few of our fellow citizens managed to save the sums of EUR 40,000-50,000 (for the purchase real estate worth EUR 160,000).
Reduction of construction activity
According to her data ELSTAT investment in the construction of new houses in Greece saw an overall decline of 95% between 2007 and the end of the second quarter of 2016, while the decline in private construction activity between 2005 and the end of the first half of 2016 reached 93%. It is typical that investment in housing in percentage GDPit fell from 10.8% in 2007 to just 0.8% in 2015.
Almost 15 times fewer homes were built in 2016 than in 2007, when construction activity was at its peak. Only 4,853 new homes were completed in the first eight months of 2016, compared to 71,936 homes built in the same period in 2007, according to ELSTAT data. The figures above show the extent of the decline in the housing market during record years.
Auction
According to 2021 reports, auctioneers, i.e. banks and receivers, still end up with seven out of 10 properties going under the hammer.
The launch of auctions, even for debts under €30,000, proves that they have “returned” to the normal of the past at a time when economic challenges directly affect the cost of living of our fellow citizens and do not in any way resemble the conditions of a healthy economy.
In the first half of 2022 alone, over 17,500 residential auctions took place. A representative of a claims management company said in an interview that in the next five years, 20-25% of all properties it owns will gradually come up for sale.
If a percentage of the order of 25% to 30% of the 700,000 properties is liquidated in the coming years, approximately 200,000 properties will be sold through auctions, which are a key tool for achieving the goals envisaged in the funds’ business plans. and the management companies that have set out to implement them, we are all aware of the potentially rapid decline in our country’s home ownership rate in the coming years.
Most of the buyers are either “partnership” funds or domestic or non-private investment programs or private individuals, most of whom do not intend to own the property but to use the property.
Decreasing home ownership
Greece may have exited the memorandums, but home ownership rates appear to be returning to lower rates than during the memorandum years.
In 2019, the homeownership rate was 75.4%, moving to 73.9% in 2020, 73.3% in 2021, and 72.8% in 2022. Thus, home ownership in our country fell by 2.6 percentage points in the period 2019-2022.
2022 is the first year we see ownership rates lower than the memorandum years in the table above.
During difficult years for the Greek economy, and by extension for all citizens, such as 2016, 2017 and 2018, the percentage of home ownership was 73.9%, 73.3% and 73.9%, respectively.
A lower percentage of owner-occupied housing has not been recorded here since 2005.
The decrease in the occupancy rate by 2.6 percentage points in the period 2019-2022 in absolute numbers corresponds to approx. 102,695 apartments (3,949,900 housing stock –Eurostat 2019).
Accumulated demand / Low availability
Every year, 15,000 to 20,000 of our fellow citizens – families – are looking for housing. Some of them chose to buy real estate before the economic crisis.
So within 10 years the demand reached 150,000-200,000 houses, the real estate market has never had such a large inventory of houses for rent and especially at a time when the construction industry – the construction of new apartment buildings did not exist.
The immediate need for housing, the accumulated demand, the lack of new buildings for rent and at the same time the conditions for the provision of new housing loans from banking institutions (which now require 25-30% of the borrower’s own participation in the purchase of real estate), in conjunction with today’s wages and the increase in family expenses budget with indirect and/or direct taxes over the decade, have led to the current image of the real estate market in terms of rentals.
Loss of purchasing power
The retreat of purchasing power limits the demand in the housing market. According to new research, high inflation and punctuality have a direct impact on the consumption habits of Greeks and internationally. Greece is very high among countries reporting a decline in purchasing power and high levels of concern
According to Eurostat, we have the second lowest wage growth in Europe over the three-year period 2019-2022. Malta is worse with -2.4%, followed by us with +1.7% and Spain with 3.8%. Greeks had the fifth lowest disposable income (€9,520) in the European Union in 2022, after Bulgaria, Slovakia, Romania and Hungary, at a time when, according to ELSTAT, 26.3% of Greeks are on the verge of poverty and social exclusion.
Job insecurity
Job insecurity, especially in the 24-35 age group, is a major inhibiting factor. The older devotees have largely retired from their original/permanent jobs. Now, the facts in the work sector have changed a lot not only in terms of permanence, but also in terms of income. The rule of increasing income from the past based on years of service has long been broken.
In addition, job insecurity and low incomes prolong the stay in the RD for a long time. According to the latest surveys, 71.9% of young people aged 18-34 live in a children’s room due to the inability to financially manage it on their own.
Short-term rentals
The rapid increase in rents coincides with the strong “discovery” of the sharing economy sector – short-term rental in our country. The short-term rental industry is undeniably a key reason for the increase in asking rent, especially in areas where there is a strong tourism boom. It mainly affects the starting prices of real estate rentals suitable for students and bachelors in areas where strong dynamics of the sector are recorded. We cannot credit the short-term rental industry with a leading role in increasing rents in family-friendly properties and/or areas that do not experience tourism dynamics.
Absence of a comprehensive housing policy plan
Greece has been slow to implement a comprehensive housing policy plan at a time when many countries in Europe have been implementing extended housing policies for decades by creating social housing, while given the conditions that have developed especially since 2018–2019, they have taken new measures to contain housing costs.
We have to take seriously and understand that the increased cost of housing no longer affects only the lower economic strata that are close to the risk of poverty and/or economically vulnerable households or only young people, but also people whose incomes are higher on the one hand, on the other too low to be placed under private market conditions.
Economic challenges in the global community, as well as in our country, are just around the corner and there is an urgent need to expand housing policies, policies with the expansion of beneficiaries, in order to reduce the costs of the next day and the availability of the housing market. , but at the same time policies with a 2-3-year implementation that will aim to eliminate own data in the future, as well as measures that will “protect” ownership in conditions of an unhealthy economic environment.
Measures to relieve the family budget of a family who rents their main residence, pays rent for their student but is not entitled to student allowance, to young people under 39 who do not fall under the above scheme because they have higher earnings, who want to buy a house , but they don’t have the same participation rate (they don’t have savings) that banking institutions require, 26 years old in 2009 and now 40 years old, just one year over the age limit. Actions that expand beneficiaries.
The creation of cheap and truly small credit measures based on today’s needs cannot be the flagship of the housing policy of a country that is the champion in housing costs, which requires a full salary to rent a family home, in which 36.9% of Greeks live. households with arrears on mortgages, rents or utility bills, but one of the many measures of a comprehensive housing policy plan – which we do not have.
Do not forget that our country is one of the few countries in the EU that does not have social housing (not for workers). Social housing represents forms of intervention – construction, regulatory measures, etc., by national governments and/or local authorities in a market residence to ensure access for all.