Newbuilts' prices up even more than 70% from 2017 to 2023
Newbuilts' prices up even more than 70% from 2017 to 2023
  Economy  |  Greece  |  Residential

Newbuilts' prices up even more than 70% from 2017 to 2023

An important factor for the rapid increase in sales prices is the ever-increasing cost of construction and energy.
RE+D magazine

The domestic real estate market continues the "rally" of increases, it is remarkable that between 2010 and the second quarter of 2023, the sale prices for houses have risen 46% in the European Union, according to Eurostat data.

Particularly in Greece, house sales prices jumped by 71.1% in Attica from 2017 to the second quarter of 2023 and by 53.8% nationwide. In many cases the sale prices in Attica are reduced by 5.3% compared to 2008 which is the year with the highest price point.

An important factor for the rapid increase in sales prices is the ever-increasing cost of construction and energy. The construction cost from €1,000/sqm -€1,200/sqm without counting the cost of the plot a few years ago, now reaches €1,500/sqm -€1,700/sqm, i.e. an increase of 50%-60%.

Main reasons why house prices soared

  1. Increase in construction costs. The precision of the materials and the energy, has made the construction even more expensive and therefore the final cost of a property. The increase in construction cost even reaches 50%-60% in recent years.
  2. Increase in sale/Compensation prices of plots. From 2018 until today, both the asking sale prices of the plots and the requested percentage of consideration have increased significantly.
  3. High Demand / Investment Interest. A 39% increase in foreign investments in Greek real estate was recorded in the first half of 2023 compared to the corresponding period last year according to the data presented by the Minister of National Economy and Finance. It is worth mentioning that in the previous year, in 2022, we had investments from foreigners in real estate, approximately 2.1 billion euros, which means 68% more than in 2021. While this year, according to the Bank of Greece, during the 9 months of 2023, foreign direct investment in real estate amounted to net receipts of 1,644 million euros, exceeding by 28.7% the corresponding level of receipts recorded in 2022 (1,277 million euros).
  4. At the same time, the real estate investments of the 9 Real Estate Investment Companies (Real Estate Investment Companies) at the end of June amounted to 4,603.4 billion. from 4,430.8 billion euros in December 2022, an increase of 3.9%. AEEAP started in 2018 with 471 properties reaching 655 in 2022 (38.4% increase). The biggest increase (19.7%) occurred between 2018 and 2019 (from 471 properties to 564), while the FFO index increased by 41.6%, from 76.46 million to 108.1 million euros.
  5. Tourism / Returns. The rise of the tourism industry in conjunction with the investment opportunities contained in the domestic real estate market due to memos and falling prices, have been a magnet for returns for investors targeting both residential and tourist properties.
  6. Inflation / Zero deposit rates. One of the main savings tools for Greek depositors after the country's entry into the eurozone is being "abolished". We are talking about time deposits, which according to the banks, after their yields have shrunk to just above 0%, no longer have a reason to exist. A fact that, in connection with the rapid increase in inflation, seems to have been a help that "fed" the real estate market with funds from those looking for safe investments and returns.
  7. Golden visa. From the beginning of 2023 until August 1st, there was an investment "frenzy" by those interested in order to secure a property in the areas of high demand without having to spend at least 500,000 euros.
  8. Redevelopment projects/metro-suburban. The start and completion of both the renovation projects and the extension of the metro (e.g. Line 4), in the predetermined times, are an important factor that will contribute decisively to the evolution and the approach of investment funds in the respective area.
  9. Short term leases. The industry records high occupancy rates in both the summer months and the winter season in many destinations. The sharing economy industry is a "piece" of the new tourism model that is already taking shape. The sector's high returns attract investment capital to the real estate market.