Attica property prices soared 11.1 percent year-on-year in the second quarter of 2019, Bank of Greece data showed on Monday, as buying interest by foreigners has brought about the fastest growth rate since the mid-2000s.
The pace of the increase around the country grew to 7.7 percent in April-June from 4.9 percent in the year’s first quarter, with Thessaloniki seeing residential property prices advance 7 percent and Greece’s other major cities reporting 4.1 percent growth. Last year prices had posted a 1.7 percent annual expansion, with a clear acceleration in the latter half of 2018.
The age of properties appeared to play a very small role in the price increase, as newly built homes (up to five years old) enjoyed 7.7 percent growth while older residences saw a rise of 7.6 percent.
This increase is almost exclusively attributed to demand from abroad as a result of the investment opportunities in the market of short-term rentals, as well as the Golden Visa program, which grants residence permits to non-European Union buyers of properties worth at least 250,000 euros.
Over the course of last year, funds from abroad invested in the local real estate market grew 172 percent from 2017, reaching up to 1.3 billion euros. Just over half of that (655 million euros) concerned property acquisitions by foreign buyers, while the rest had to do with investment moves such as property developments and the reconstruction of existing buildings.
This development is positive for owners hoping to sell their homes as well as for borrowers from previous years, who are now seeing their assets gain in value. The financial reports of banks too are getting a boost through the rise in the value of their property portfolios. However, this is bad news for people who want to buy property in Greece, as the money required for an acquisition is increasing while local households’ purchasing power has not yet recovered. Given that more and more households are turning to renting, rental rates are also on the rise, with some areas posting an increase up to 34 percent year-on-year.