Excess demand for new homes is projected to be maintained at least until 2005, as supply should remain weak due to the preoccupation of the construction sector with projects for the Olympic Games of 2004, a recent study says. After 2005 higher supply and a possible enlargement of areas for development – with a dampening effect on land prices – should have a balancing effect on the housing market, says the study, titled «The housing market in Greece: Excess demand and investment,» in Alpha Bank’s latest quarterly economic review. After rising 23.9 and 5.5 percent in 1999 and 2000 respectively, housing supply fell 37 percent last year. The report notes that rising house prices in the last five years are due mainly to the drastic reduction in mortgage rates rather than to a rise in construction costs. In the 1997-2001 period, such costs rose on average 4.4 percent, in line with the general price level. Mortgage rates fell from 12.75 percent in the first quarter of 1999 to 6.25 percent two years later, and are at still lower levels today. Although this trend has led monthly mortgage repayments down to about the level of rents, house prices are actually projected to ease off in coming years. Total household mortgage debt to banks stood at 17.4 billion euros in April 2002, with substantial potential for more credit expansion, as only about 18 percent of households have taken out loans in order to buy land or homes. According to the Bank of Greece, at the end of 1999 only 10.1 percent of owned houses were burdened with loans or collateral sureties. Nevertheless, the percentage of households owning their own homes and those owning a second home have risen considerably. According to 1999 data, 42.2 percent of Greeks live in apartments, 35.9 percent in detached houses and 21.9 percent in two-story buildings.