A new study by Alpha Bank sheds light on the conditions prevailing in Greece’s housing market, one year after the first systematic recording of sector trends that revealed the true dimension of the housing crisis. The study’s main question was how a country where a significant portion of private wealth is invested in real estate and homeownership rates remain comparatively high, now faces an acute housing problem.
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The crisis “legacy” and aging housing stock
Investment stagnation in housing during the crisis prevented renewal of the housing capital stock. Housing investments declined by 25% annually on average, resulting in them accounting for just 5% of the country’s total investments by 2017. Since 2018, housing investments have been recovering, albeit at significantly lower levels compared to the pre-crisis period. Specifically, nearly two-thirds of homes were built before 1990, while only 2.6% have been constructed since the crisis began. The need for extensive renovations and energy interventions is now evident: six out of ten primary residences require energy upgrades, a reality shaping both private investment profiles and social needs for the next decade.
Vacant homes: an underutilized reservoir
Despite market tightness, 35% of the country’s regular housing remains unoccupied — the third highest rate in the European Union. These are either secondary/vacation homes (22.5%) or genuinely vacant properties (12%). Although vacant homes decreased by 11.6% compared to the previous census, their number remains high.
Alpha Bank’s analysis concludes that reasons include multiple ownerships and communication difficulties between owners/heirs, significant costs associated with renovation and energy upgrades, and relatively low financial returns in some cases, likely related to high counterparty risk. Despite obstacles, one in five considers renting out their property, which could potentially boost supply in the future.
Pressure from major urban centers
Population concentration in Athens and Thessaloniki remains a determining factor in housing pressure. More than 70% of the population lives in cities, towns and suburbs, while nearly half concentrates in the two largest urban centers. Attica especially functions as an economic activity hub: hosting 35% of the population, producing 46% of GDP, and housing nearly 40% of businesses. Housing demand in an area where supply cannot increase at comparable rates largely explains the continued rise in purchase prices and rents.
Increased satisfaction but concern for the future
The new follow-up survey records improved satisfaction with current housing (+9%), mainly among homeowners. Tenants, conversely, remain the least satisfied category, possibly linked to rental pressure.
The percentage of respondents expecting rent increases is nearly identical (~70%) regardless of housing status. However, the corresponding percentage among landlords (59%) is significantly lower compared to tenants and the overall sample average. Changes are also recorded in perceptions of factors shaping prices and rents: sharing economy growth, especially in specific areas, is recognized as the most important factor, followed by government policies.
Despite pressures, home purchase intention increases by 8% overall and 13% among tenants.
The “My Home II” program and new dynamics
Interest in the “My Home II” program exists but isn’t universal. 24% of interested parties had submitted or planned to submit applications during the survey period, while 45% rule out this possibility, mainly due to income and age criteria. However, general program acceptance remains high, with 66% agreeing with its philosophy.
Toward a new housing policy
The data converges on a clear conclusion: Greece’s housing issue is primarily a supply problem. Addressing it requires a coherent strategy.
Employment opportunity concentration in a limited number of large cities significantly increases housing demand in these areas, resulting in rising prices and rents. Studies to identify and integrate new areas into urban planning, combined with strengthening decentralization processes and expanding remote work, can contribute to easing affordable housing pressures through various mechanisms.
These mechanisms allow geographical demand dispersion, reduced transportation costs, indirect housing supply increases, and weakening the relationship between workplaces and pressured housing markets. These factors will not only lead to supply liberation in major urban centers but also enhance regional economic viability and revitalize local economies through increased consumption, job creation, and entrepreneurship enhancement.
Measures like tax relief for companies employing permanent remote workers, combined with tax incentives for homeowners who rent their properties in large cities to relocate to smaller towns and rural areas, would have significant benefits.
Additionally, factors preventing vacant homes from entering the market can be categorized into two groups for policy design purposes.
Specifically, the analysis identified these key elements: multiple ownerships and communication difficulties between owners/heirs, significant costs associated with renovation and energy upgrades, and relatively low financial returns in some cases, likely related to high counterparty risk. Regarding the latter, creating a transactional behavior registry could significantly reduce this risk, while measures already taken, such as energy upgrade subsidies, are in the right direction.
A second group of factors explaining high vacant property numbers relates to the temporary nature of this situation. Specifically, one in five vacant property owners declares intention to seek tenants in the immediate future, 6% to sell the property, while about 15% appear to keep it closed for future personal or family use. For the first case in this group, implementing additional tax incentives could accelerate property market entry.
The most recent series of government measures aims to facilitate vacant/underutilized property market entry procedures. However, further research is required in this field to map vacant properties using Land Registry and Independent Authority for Public Revenue data, enabling housing policy makers to design targeted programs for each municipality and area.
