A total of 212,000 homes are estimated to be missing from the Greek property market, according to a study by Piraeus Bank. This is the reason why prices are 14% overvalued today, compared to the level they should be at according to the fundamental macroeconomic figures of the Greek economy.
The analysis adds that the main reason for the reduced supply is that short-term rental activity has absorbed 170,000 assets.
The bank’s analysts estimate that although no immediate increase in property supply is anticipated, in order to satisfy the excess demand, the cycle of double-digit percentage increases in housing prices has now passed and while prices will continue to increase, this will now happen at single-digit rates.
According to Piraeus Bank’s head of financial analysis and investment strategy, Ilias Lekkos, one of the parameters that explain the drop in supply is the collapse of private construction activity during the financial crisis.
In 2001-2011 it is estimated that the housing stock nationwide increased by 917,000. In 2005 alone, when construction peaked, 195,000 new residences were delivered. On the contrary, in the decade that followed (2012-2021), the new homes added to the stock did not exceed 155,000. That is, they were less than in a single year (2005), even if that was the best ever.
In the same period, in terms of demand, 582,000 new households were created in 2001-2011, while in the following decade, the corresponding number decreased to 197,000. At the same time, however, 170,000 properties were absorbed for short-term rentals, so total demand reached 367,000 properties.
That is how the deficit of 212,000 homes happened, which also explains the very high sales prices. Had it not been for the short-term rental rally, the supply-demand balance in the housing market would have been clearly better than it is today.
However, as analysts explain, the first signs of market fatigue have now begun to appear, as high prices seem to have begun to cause a decrease in transactions.