Housing Market Constrained: affordability and private debt act as brakes on development

The data from a recent study by IOBE, supported by CEPAL, on private debt depict a scenario of mild deceleration, without, however, undermining the overall upward trend observed since 2017.

As noted, construction activity increased steadily in the post-crisis period, alongside growing real estate investments. However, in 2025, a marginal slowdown in growth was recorded, with a slight decline in building permits (-2.2%) and a more pronounced contraction in the total area of new housing (-8.9%).

Following a particularly strong performance in 2024, construction activity experienced a slowdown in 2025, confirming a phase of normalization. At the same time, the rise in material costs since 2021 does not appear to have had a decisively negative impact, as the economic climate in the construction sector remains positive, indicating resilience and the maintenance of investment expectations.

In terms of prices, the trend remains strongly upward. Housing prices have been steadily increasing since 2017, with the recovery accelerating in recent years, particularly in major urban centers, especially Athens and Thessaloniki. This development is linked both to increased investment and to strengthened demand.

Of particular significance is the differentiation based on apartment size. Smaller apartments show higher prices per square meter and faster price growth, suggesting increased demand for smaller housing units, likely due to limited incomes and changes in household composition.

Financing Sector
Disbursements of housing loans have shown a gradual recovery since 2021 but remain at low levels, reflecting both cautious lending conditions and restrained demand from households.

Over-indebted Households
Total private debt (to financial institutions, tax authorities, and social security funds) reached €407.6 billion in the third quarter of 2025, primarily due to credit expansion and the continued accumulation of obligations to the state.

Overdue debt remains high (€235.6 billion, or 58% of total private debt), mainly consisting of tax and social security obligations (approximately 70%). Total private debt in loans reached €245 billion (approximately 98.6% of GDP), with business loans accounting for the largest share.

Non-performing loans represent 30% of all loans held by banks and management companies (€73.9 billion), the majority of which are managed by servicers (€68 billion).

At the same time, foreclosures involving properties successfully sold through auctions during 2021–2024 accounted for approximately 7% of total transactions.

The most critical issue remains housing affordability. Greece continues to face a structural problem, recording one of the highest housing cost burdens in the European Union. Rising costs, combined with increasing property prices and rents, place a significant strain on households, particularly in major urban centers.