Greek Property Prices Rise Amid Risks, Central Bank Warns of Potential Uncertainties

• 2 July, 25

After a period of continuous price increases and robust market demand, Greece’s real estate sector in 2025 presents a “strong on the surface, risky underneath” dual reality. According to the Bank of Greece’s 2024–2025 Monetary Policy Report, while the property market continues to attract investor attention, key indicators have started to show signs of weakening — particularly the decline in foreign investment enthusiasm and a slowdown in construction activity — casting uncertainty over the sector’s outlook.

Drop in Foreign Real Estate Investment Impacts Market Sentiment

Data shows that in Q1 2025, net foreign direct investment (FDI) in Greek real estate dropped by 31.4% year-on-year, falling from €520 million in the same period of 2024 to €356.8 million. Although total FDI increased to €1.2 billion, more funds flowed into manufacturing and construction sectors, reducing the relative attractiveness of real estate investment.

Greece’s Real Estate Market: Opportunities and Challenges

While segments like residential and hotel properties remain popular, structural issues in the Greek real estate sector are becoming more evident, including:

• Persistently rising construction costs
• Shortage of skilled workers and labor
• Complex and delayed property transfer and approval procedures
• Frequent regulatory changes, such as the recent ruling against incentive clauses for new buildings and restrictions on small settlement developments

These factors are increasing operational difficulty and eroding confidence among developers and investors.

Continued Price Growth Pressures Local Affordability

Despite a slowdown in pace, nationwide apartment prices in Greece still rose by 6.8% year-on-year in Q1 2025. Prices for new apartments jumped 10.2%, while older apartments increased by 8.1%. Thessaloniki and several other regions saw even higher growth (11.4% and 10.7%), surpassing the national average.

Notably, new residential property prices nationwide — especially in Athens and Thessaloniki — have hit record highs. This puts significant pressure on local households, making housing affordability a growing concern.

Plunge in Building Permits Pressures Residential Supply

In the first two months of 2025, nationwide residential construction activity fell sharply — building permits down 50.8%, and construction volume down 49.7% year-on-year. The Attica region saw even steeper declines. While construction costs rose by 3.5% year-on-year (a slightly lower increase than last year), overall investment in construction remains low, accounting for only 2.1% of GDP.

Golden Visa and Lending Policies Offer Some Support

In the first four months of 2025, the number of “Golden Visa” applications surged to 3,506 — a 31.9% year-on-year increase — indicating that foreign high-net-worth individuals remain interested in Greece’s residency program. Additionally, under the “My Home II” initiative and driven by falling interest rates, housing loan issuance rose by 5.8% year-on-year.

Diverging Trends in Commercial Real Estate: Premium Offices Favored

In H2 2024, prices for high-end offices and prime retail spaces in Athens’ Central Business District (CBD) rose by 6.3% and 3.5%, respectively, with overall investment yields holding steady between 5.2% and 6.7%. Meanwhile, development activity for offices and hotels slowed significantly, whereas retail development rose sharply by 52.4%, reflecting a shift in investment focus.

Furthermore, green buildings and ESG-compliant office spaces are emerging as new trends, attracting strong interest from companies and investment funds.

Long-Term Stability Requires Policy Support

The Bank of Greece believes that in the short term, the real estate market will continue to benefit from economic stability and supportive policies. However, medium- to long-term risks should not be ignored — particularly weakening external demand, rising costs, and insufficient supply — which may undermine market fundamentals.

To achieve sustainable development, Greece needs to implement the following measures:

• Accelerate reforms in land planning and permit processes
• Introduce long-term supply-expansion policies to increase housing inventory
• Promote balanced regional development to reduce over-concentration in real estate
• Ensure regulatory stability to restore confidence among developers and homebuyers

Cre: news.b2green.gr