Housing Market Slows Amid Dropping Investments: What You Need to Know
For the third straight quarter, the housing market is losing momentum, with investments continuing to decline.
Impact of Golden Visa Tightening
The government's new measures to make it harder to qualify for a Golden Visa are causing worries about further decreases in investments. People are also concerned about low mortgage rates.
Government Efforts to Boost Investment
To counteract this, the government plans to inject money into the market through subsidized MyHome loans. These loans will offer lower interest rates to make buying a home more affordable. At the same time, banks are easing some lending conditions, but this mostly benefits younger buyers as most people cannot afford current housing prices with their incomes.
The Price Index: Unchanging Yet Concerning
Of all the indicators used to follow the real estate market's progress, only the price index—a number that tracks changes in home prices—has bounced back to pre-crisis levels. However, this increase in prices hasn't led to more investments in homes. In fact, investments in residential properties declined to only 13-14% of all investments in the country during the first quarter of 2024. Before the financial crisis (2006-2008), housing investments were much higher, ranging between 36% and 42%.
Growing Housing Problem
This inability to stimulate investment in real estate is a big problem. Housing demand is increasing, but there aren't enough homes to meet this demand. If home prices keep rising without more investments following, there's a higher chance that we could see a drop in home prices again.
Current Investment Figures
According to the Hellenic Statistical Authority, out of a total of €7.37 billion invested in the first quarter, only €984 million (about 13.34%) went into housing. While overall investments grew by 6% in the first quarter, real estate investments fell by 12%. This is also evident in the low housing loan amounts provided, which are limited to around €100-130 million per month.
Key Terms Explained
- Golden Visa: A program that grants residency to people who invest a certain amount of money in the country, often through real estate.
- MyHome Loans: Government-backed loans aimed at helping people buy homes by offering lower interest rates.
- Price Index: A number that shows how home prices are changing over time.
- Hellenic Statistical Authority: The governmental body responsible for collecting and analyzing statistical data in Greece.
With investments down and home prices up, the outlook for the housing market remains uncertain. Understanding these trends can help you make more informed decisions, whether you're looking to buy, sell, or invest in real estate.
