Housing crisis is worsening in Greece - Central Bank: House prices are showing no signs of slowing down
The housing problem in Greece is worsening significantly, the Bank of Greece announced in its latest financial stability report, noting that housing costs as a percentage of disposable income reached 35.5% in 2024.
This situation comes as a result of rising house prices and rents, together with the high fiscal burden on real estate and increased maintenance costs. The Bank of Greece warns of “the beginning of a build-up of cyclical systemic risks” for the economy, although without serious concerns for financial stability.
According to the data, mortgage loans reached 819 million euros in the first half of this year, marking a 38% expansion compared to the previous year, when the corresponding figure was 593 million euros. A large part of the demand in the domestic market is related to purchases made without the mediation of banks, i.e. without bank financing. However, even with this increase, new loans for housing, including the “My Home II” program, remain much lower compared to the period before the financial crisis. This is despite the fact that from January 1, 2025, lending criteria have been eased, allowing loans of up to 90% of the property value when it comes to a first home (and up to 80% when it is not).
According to the Bank of Greece, the price trend in the housing market is showing no signs of slowing down and is expected to continue to rise in the future. This will happen as long as demand from the domestic and foreign markets remains strong, while the supply of available housing continues to be limited.
The central bank says the low supply of housing relative to demand is because many properties are used for investment, some have been withdrawn from the market due to non-performing loans and are expected to be sold at auction. Also, during the years 2010–2020, few new homes were built, hindering the growth of the building stock.
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