Greece is currently grappling with a severe housing crisis, characterized by skyrocketing rents and home prices. This situation has been exacerbated by foreign investments and a lack of available properties, leading to a significant strain on the local housing market.
Key Takeaways
- Housing shortage in Greece has led to increased rents and home prices.
- Foreign investors are contributing to the crisis by purchasing properties for rental income.
- Government measures have been implemented to address the housing supply issue.
The Current Housing Crisis
The housing market in Greece is facing unprecedented challenges, with a notable shortage of available properties. This shortage has resulted in a dramatic increase in both rental and purchase prices, making it increasingly difficult for locals to find affordable housing. The situation has been further complicated by foreign investors who qualify for Golden Visas by purchasing properties, often opting to rent them out rather than making them available for long-term residents.
Impact of Foreign Investment
Before the government intervened to restrict the use of Golden Visa properties on short-term rental platforms like Airbnb, over 20,000 housing units were removed from the long-term rental market. This drastic reduction in available properties has intensified the competition for housing, driving prices even higher. The Bank of Greece has indicated that the low supply of quality real estate has spurred construction activity, but the pace of new developments has not kept up with demand.
Historical Context
The current housing crisis marks a stark contrast to the period from 2010 to 2018, when Greece was mired in an economic and austerity crisis. During that time, home prices plummeted due to significant pay cuts, tax hikes, and widespread unemployment. The market has since begun to recover, but the lack of investment in residential properties remains a significant issue. A report from the Foundation for Economic and Industrial Research (IOBE) highlighted that residential investment in 2022 was only โฌ3.3 billion, a staggering 87% drop from โฌ25.2 billion in 2007.
Mortgage Challenges
The decline in housing investments is closely linked to a significant reduction in mortgage loans. In 2023, fewer than 14,000 mortgages were approved, compared to 115,000 in 2008. This decline has been attributed to banks’ reluctance to issue loans following the financial crisis, despite a slight recovery in the economy. The distribution of housing data reveals that only 26,000 new housing units were added to the market nationally, with a mere 4,500 in the Attica region, which includes Athens.
Government Initiatives
In response to the ongoing crisis, the Greek government has launched the My Home II program, aimed at providing low-interest housing loans to young families and households. This initiative is designed to help alleviate some of the financial burdens associated with purchasing a home. The program has allocated โฌ2 billion for 20,000 beneficiaries, with applications starting on January 15, 2025.
Conclusion
As Greece navigates this complex housing crisis, the interplay between foreign investment, local demand, and government intervention will be crucial in determining the future of the housing market. Without significant changes, many residents may continue to struggle with the rising costs of living and the lack of affordable housing options.
Sources
- Greeceโs Housing Shortage Spikes Rent, Home Prices, Dries Supply – The National Herald, The National Herald.
