According to the latest report by the Bank of Greece (Monetary Policy 2024–2025), the country’s housing market has retained its momentum despite mounting challenges. In 2024, apartment prices rose by 8.9% year-on-year, while in the first quarter of 2025, the upward trend continued with a 6.8% increase. Although the pace of growth has slowed compared to 2023 (13.9%), property values remain at historically high levels.
The price surge is more pronounced in newly built apartments (up to five years old), which typically offer higher construction quality and superior energy efficiency. In 2024, prices for new properties climbed by 10.2%, compared to an 8.1% rise for older units—a pattern that persisted into early 2025.
From a regional perspective, the sharpest increases were observed in Thessaloniki and other parts of Greece, where growth outpaced the national average. In Thessaloniki alone, annual apartment prices rose by 11.4% in 2024 and by 10% in 2025.
The Paradox of Construction Decline
Despite strong demand, the supply of housing continues to fall short. Construction activity has entered a steep decline: in the first two months of 2025, the volume of buildable space dropped by 49.7%, while new building permits fell by 50.8%. In Attica, the decreases were even more dramatic—exceeding 57%.
Investment in residential construction declined by 0.3%, remaining at an exceptionally low level of 2.1% of GDP. Rising construction costs (+3.5% annually) and a persistent shortage of skilled labor further reinforce the stagnation in new developments.
Compounding the situation are recent Council of State rulings on the constitutionality of the New Building Code and settlement zoning procedures, which highlight that the current regulatory framework does little to encourage new housing production.
Investor Caution Persists – “My Home II” Emerges as Key Financing Channel
Investor uncertainty is increasingly evident in capital flows. In the first quarter of 2025, net foreign direct investment (FDI) in the real estate sector declined sharply by 31.4%, falling to €356.8 million. This drop reflects not only global market volatility but also ongoing structural inefficiencies within the Greek real estate landscape.
Conversely, the Golden Visa program continues to exhibit strong performance, with residence permit applications rising by 31.9% in the first four months of 2025, reaching a total of 3,506. The scheme remains a major draw for international investors, particularly in hospitality-related assets and vacation properties.
In terms of domestic financing, new mortgage lending showed a modest recovery, increasing by 5.8% between January and April 2025. This marks a slight rebound after a prolonged stagnation period and is largely attributed to the government’s “My Home II” initiative, combined with the gradual easing of interest rates.
Housing Affordability Policy: One-Sided or Unsustainable?
Housing affordability has become one of the most pressing constraints for Greek households. The continuous rise in property prices, combined with the sluggish pace of income growth, is pushing an increasing number of people out of the market. The housing crisis no longer affects only vulnerable social groups—it now extends deeply into the middle class.
Although subsidy programs carry significant social value, they primarily fuel already excessive demand without addressing the root cause of the problem: the insufficient supply of new and affordable housing.
As highlighted in the Bank of Greece’s recent report, there is a clear need for comprehensive interventions that focus not only on the demand side, but also on boosting supply. Among the proposed or implicitly recommended measures are:
- Simplifying and accelerating licensing and property transfer procedures;
- Establishing a stable land-use framework with clear and consistent building regulations;
- Promoting regional development to ensure a more balanced distribution of demand and to ease pressure on metropolitan areas;
- Leveraging vacant or abandoned properties through incentives for private owners or public-private partnerships (PPPs) to restore and convert them into housing;
- Developing specialized financing tools to support the construction of socially affordable housing with private sector involvement.
The experience of 2024 and the first months of 2025 reveals that subsidy programs and targeted financial aid—such as interest subsidies on mortgage loans—are insufficient on their own. On the contrary, they often intensify price pressures when not accompanied by robust policies to increase housing supply.
What is now required is a coherent national housing strategy—a strategy that promotes regional growth, encourages the reuse of existing buildings, expedites construction procedures, and ensures regulatory stability. Only through such an integrated approach can the housing market become sustainable and accessible for all citizens.
