The recovery in Greece’s housing market gained speed in the second quarter with prices increasing at the strongest pace in more than 12 years, helped by an expanding economy and growing foreign interest, central bank data showed on Monday.
Property accounts for a large chunk of household wealth in Greece, where the home ownership rate is 80 percent, above the EU average of 70 percent.
Apartment prices rose 7.7 percent in the second quarter compared with the same period a year earlier, Bank of Greece data showed, accelerating from a 1.3 percent increase in the first quarter of 2018.
More specifically, prices rose by 11.1 percent year-on-year in Athens, where home-sharing platforms such as Airbnb and a “golden visa” program – a renewable five-year resident’s permit in return for a 250,000-euro ($285,000) investment in real estate – have grown very popular.
Greek house prices fell 42 percent between 2008, when the country’s protracted recession began, and the end of 2017.
A similar trend is unfolding in Greek prime office prices, which rebounded 7.0 percent last year.
“Housing prices rose 3.5 percent quarter-on-quarter, a seventh consecutive quarter of growth. Year-on-year it was the strongest pace in 12 and a half years,” said National Bank economist Nikos Magginas.
The uptrend was seen in all market segments – including old and newly built apartments – and in all regions, though prices in the capital led the way.
“Increasing demand from residents and non-residents, buoyed by positive macroeconomic trends and the first reduction in real estate taxation in a decade, supports the uptrend,” he said.
The Greek market had been hurt by property taxes imposed to plug budget deficits, tight bank lending and a jobless rate still around 17.2 percent, the highest in the 19-nation euro zone.
But economic prospects have improved since 2015 when Greece signed up to a third bailout package worth up to 86 billion euros ($107 billion). The country emerged from its latest bailout in August last year and is now relying on markets to cover its financial needs.
Greece’s 180-billion-euro economy expanded in January-to-March, but at a slower annual pace than the quarter before, mainly driven by consumer spending and a pick-up in investments. [Reuters]