Buying a new home is turning into an “elusive dream” for the vast majority of Greek households.. The main reason is the jump in sales prices as a result of rising construction costs, land prices and the higher energy efficiency standards that all new buildings must now meet. According to the current analysis of the company of certified appraisers Geoaxis Property & Valuation Services, from 2017 to 2022, i.e. during the period of recovery of the housing market from its lowest point, prices for apartments in new buildings increased by 75.5% in the case of e.g. Amarusi.

Today, the average asking price of a new building in the northern suburbs, which are also the core of demand from the Greeks, fluctuates around 3500-4500 euros/sq.m. in objects under construction, while transactions are made just below this level. However, a few years ago the average price did not exceed 2000-2500 euros/sq.m. Of course, in 2018 there were fewer new buildings than today, and the buying interest was not as high.

Reasons for the rally

However, the main reason is the cost of construction. As Greek Builders Federation President Dimitris Kapsimalis explains to K, “The VAT suspension measure introduced in early 2020 led many builders to rush to buy new plots, which led to a sharp increase in prices.” and rates of consideration. Then came the pandemic and rising material prices due to supply chain disruption, and then the war in Ukraine. In addition, due to the shortage, there is currently a sharp increase in the labor force. All of the above increased our costs even up to 2,000 euros/sq.m, not counting the cost of the land.”

Thus, the asking prices for the sale of a typical apartment of 100–110 sq. m, offering two bedrooms and an office space or three bedrooms, even on the ground floor of a house under construction in the northern suburbs, start from €350,000 and easily reach even €500,000, depending on the location, area and individual characteristics of the respective object. This is money that very few people can manage today, especially as access to bank financing remains difficult and indeed continues to be difficult after the successive increase in interest rates by the European Central Bank.

Rising construction costs, high compensation rates, are the main reasons for rising prices, which in some areas reach up to 75%.

The average increase in sales prices for new buildings for the period from the beginning of 2018 to the present day in Attica is about 50% -60%. According to the price index of the Bank of Greece, from the first quarter of 2018 to the third quarter, the total price increase in Attica reaches 54% (new and used). In general, new buildings are sold across the country by 40.5% more, and second-hand ones – by 36.6%. Characteristically, the Bank of England indices (Q3 2022) for new buildings are at their highest level since the beginning of 2012. In fact, they are only 16% behind the highest point of the market in 2008.

According to real estate market operators, although most sales transactions are carried out with cash and equity financing, however, when the amounts grow to such a height, it is extremely difficult to have such liquidity without even resorting to partial bank borrowing. For this reason, even those households that have some liquidity to purchase real estate eventually turn to used buildings, either up to 15-20 years old or even older, especially if they have undergone renovation.

Despite all this, demand exists and is really very high, as a result of which new buildings do not remain unsold for a long time. “Lawyers, freelancers and doctors are the main group of buyers of new buildings in the northern suburbs, while in the southern suburbs the cost is even higher, in the range of 7-10,000 euros/sq.m. in some buildings, the main group of buyers are businessmen, high-ranking executives and, of course, foreign buyers,” says Mr. Kapsimalis.

Old properties

It should be noted that the gap between new and used cars has now begun to narrow significantly. With new construction remaining in short supply and over budget for most, asking prices for used homes are also high. Even those built since 2002 often cost only 5-10% less than new ones, which of course makes them less attractive. Accordingly, significant growth is also observed in houses aged 30-40 years, which are requested, for example. even instead of 2700-3000 euros/sq.m., especially if these are renovated properties. However, as you can see from the ads, most of the old properties asking for such amounts remain unsold even for 2-3 years. However, since many owners of this property do not have an urgent need to sell, the discounts made are small. Conversely, real estate offered at more affordable prices almost always finds a buyer immediately.

energy efficiency

Another reason that pushes the prices of new buildings up concerns the new obligations introduced by the latest building regulations. Based on this, all new buildings should have thermal insulation and other characteristics of high energy efficiency. The cost of these materials has risen sharply over the past two years. Thus, according to the online ad platform Spitogatos Insights of the same name, today the average offer price of new buildings with high energy efficiency reaches 4,100 euros/sq.m. from 3 311 euro/sq.m. two years ago, up 24%. However, properties with high energy efficiency are absorbed in 2.2 months or 28% faster than in the lower categories. Properties of the highest category (A+) are sold in an average of 5.6 months, compared to 7.8 months for properties in the lowest category of energy efficiency.