Alsos Veikou, north of Athens city center, is where Line 4 of the Athens metro is expected to start, heading to Goudi after passing through central stations such as Academias and Evangelismos. Properties close to the 15 stations along the new line are likely to benefit significantly from its construction.
The rise in demand for properties over the past few months, not just due to interest from foreign buyers and investors but also thanks to an improvement in sentiment among the Greek buying public, has shaken up the residential property market by creating new conditions.
A recent survey by the Foundation for Economic and Industrial Research (IOBE) for the last quarter of 2018 found that 0.8 percent of the country’s population, or 86,500 people, said they would consider purchasing a residential property, up 165 percent from a year earlier, which reflected the improved expectations of households.
Given also the significant interest from abroad, which so far accounts for 30 percent of the total volume of transactions in the home market, one sees that demand in the local property market exceeds 100,000 interested parties. Of course this does not mean that all these people will carry out acquisitions, as even when the market peaked in 2008 the annual volume of transactions came to 158,000 properties. Back then, the intention of buying a property was expressed by 3.3 percent of the population, or 357,000 people.
This is one of the main reasons why prices are heading north, with Bank of Greece data showing that prices in the year’s second quarter rose 11 percent in Athens and 7.7 percent across the country.
In fact, asking prices are even higher: According to the third-quarter data of the house price index drafted by the Spitogatos online ads register, asking prices in downtown Athens – where buyers, Greek and foreign, have been lining up for deals – have shown an annual rise of 25.3 percent, with the average rate coming to 1,522 euros per square meter.
In Thessaloniki, the rise was even greater this summer at 28.3 percent year-on-year, as the average asking rate amounted to over 1,300 euros/sq.m., from 1,020 euros/sq.m. a year earlier.
A survey on the residential market by Arbitrage Real Estate has found that the recovery of mortgage credit will be a decisive factor in an even speedier market rebound.
According to Yiannis Orfanos, a partner at Arbitrage, “the market of new mortgages came to almost 500 million euros per year for the period from 2016 to 2018, while it was far higher in the past. The housing loans market remains weak although the first signs for selective growth in activity are there now. Most transactions are made in cash, while foreigners represent a large share of buyers.”
Arbitrage surveyed a number of residential property transactions during 2018 across Greece and found that over 80 percent of them were conducted in cash.This rate is expected to be slightly improved in 2019. Orfanos argues that the mortgage loan market will need to improve considerably if it is to support housing transactions, especially with regards to local buyers.
The Arbitrage analysis also showed that the main focus of growth in the residential market is the downtown Athens area thanks to a rise in tourism demand and the soaring popularity of short-term rentals, which is expected to prove sustainable as a business sector in the coming years.
“In this context, we foresee targeted investments in renovations of properties in areas with demand continuing, albeit possibly at a slower pace. We also anticipate Athens and Thessaloniki to maintain interest in the purchase of older apartments with a smaller surface area, of low or medium value, as well as of entire buildings of the same category, aimed at their renovation for commercial utilization or resale,” the Arbitrage report noted.
After the emergence of Greece’s economy from the deep recession of the last decade, another factor that is expected to bolster the property market is the scheduled construction of Line 4 of the Athens metro. The first stage of the project, budgeted at 1.8 billion euros, will be 12.8 kilometers long and will comprise 15 stations linking Alsos Veikou with the city center and Goudi. The stations are the following: Alsos Veikou, Galatsi, Elikonos, Kypseli, Dikastiria, Exarchia, Academias, Kolonaki, Evangelismos, Kaisariani, Panepistimioupoli, Ilissia, Zografou and Goudi.
Also important for the market’s growth will be the role of demand by foreign buyers in popular tourist areas outside Greece’s two main cities, such as Crete, Halkidiki and the Aegean and Ionian islands, mainly for seaside residential properties of small or medium surface. The increase in demand primarily by foreign visitors looking for luxurious branded accommodation with high-level services both at tourism resorts and in cities, is expected to generate mobility in the residential property market covering the above standards.
The Arbitrage analysis goes on to note that startups in the field of services, Internet promotion and management for fully furnished residential properties in popular areas for medium- or long-term residence are expected to contribute to a more competitive market, to the strengthening of know-how and to the supply of houses that maintain high standards and guaranteed quality.
What is more, the active management of nonperforming loan portfolios, which contain loans that have residential properties as collateral, is likely to create opportunities for the transfer of portfolios of such properties to institutional investors, so that they are eventually returned to the residential market, the Arbitrage analysis argues.