New equilibria in property markets: insights into investor behavior

As highlighted in the 2025 report by the Governor of the Bank of Greece, interest from both buyers and investors remains active; however, the market appears to be entering a phase of more balanced growth. A key challenge remains the shortage of affordable housing options, while in the commercial real estate sector, interest is primarily focused on quality and energy efficiency.

Residential Market
In the residential sector, demand has remained strong, particularly for apartments. Nevertheless, the supply of modern and economically accessible housing continues to be limited. This has resulted in increased price pressure, especially in major urban centers. In recent years, property prices have risen significantly, prompting many households to seek more affordable options in outlying areas or older properties.

According to data from the Bank of Greece, in 2025 apartment prices increased by 7.8%, showing a slowdown compared to 2024, when the rise was 9.1%. Notably, the prices of older apartments rose more (8.1%) than those of new apartments (7.4%), confirming a shift among buyers toward more affordable options.

Regionally, the largest increases were recorded in Thessaloniki and other major cities in Greece, while Athens experienced a milder rise. This suggests that demand is beginning to spread beyond the capital, primarily due to the already high prices there.

Despite the ongoing price increases, certain indicators point to a market slowdown. Foreign investment interest appears more restrained, while construction activity has decreased, with fewer new permits and a smaller volume of building projects. At the same time, construction costs continue to rise, negatively impacting the development of new housing.

In the financing sector, new mortgage loans increased significantly in 2025 but remain low compared to earlier periods. Loan demand appears to have stabilized. In contrast, residential investments saw a marked increase, indicating that the sector continues to attract capital.

Meanwhile, expectations for the residential construction sector remain positive. However, housing affordability remains a significant issue, particularly for low- and middle-income households. To address this challenge, government measures aim to increase supply, including the utilization of public properties and the conversion of older buildings into residences.

Commercial Real Estate Market
The commercial real estate sector presents a more mixed picture. Investor interest is concentrated primarily on modern, high-standard properties, such as offices, retail spaces in central locations, and assets related to tourism, hospitality, and logistics. There is a clear trend toward energy-efficient and high-quality properties, while older, lower-standard buildings are gradually losing their appeal.

Prices for high-standard offices and retail spaces increased slightly in the first half of 2025 (0.5% and 1.1%, respectively), reflecting a slowdown compared to the previous year. In Athens, increases were marginally higher, but this did not alter the overall trend. Rents remained almost stable, with only minor increases.

Construction activity in commercial real estate showed variations by category. Overall, the number of new permits decreased, but the total construction volume increased. Specifically, offices saw an increase in permits but a reduction in total volume, while retail spaces recorded growth in both areas. Conversely, the hotel sector experienced a significant decline.

Regarding yields, high-standard commercial properties in central Athens maintained stable levels, indicating a balance between supply and demand. Expectations for 2026 are neutral for offices and retail spaces, while prospects are more positive for hotels and storage facilities.