By Thanasis Stamou – Director of INVESTA Real Estate
Since 2020 there has been an increase in real estate prices worldwide. The main reasons for this rise, according to a study published in the IMF-Blog, are a combined result of the following factors:
1. Problems of disruptions in global supply chains leading to rising costs of several inputs in the manufacturing process.
2. The prevailing low interest loan banking environment.
3. The demand for more residential real estate as the adoption of flexible work styles and remote working tends to prevail.
4. The policies implemented internationally by the states to deal with the pandemic crisis and support the liquidity of households.
Is there a market bubble?
Despite the rise in prices, their relationship to housing yield (rents) as well as disposable income has not increased to a point of concern, according to an analysis by Alpha Bank. The bank's figures show that the recovery of prices in the Greek housing market continues at a rate of 4% in the 1st Semester of 2021, parallel to the international trend of housing price increases.
According to the bank as well as the real estate market, housing prices had recorded a large drop during the financial crisis in Greece. The percentage of this drop reached 42% in the period 2008-2017. The recovery came from 2018 onwards, accelerating strongly in 2019.
The outbreak of the pandemic in 2020 did not interrupt the course of the recovery, although the annual rate of increase in residential real estate prices slowed. In 2021, the rate of acceleration resumed, reaching the growth rate of 2019.
It is worth noting that the upward trend followed by real estate prices since the beginning of the pandemic is observed at a global level and is not only a Greek phenomenon.
Alpha Bank's data, combined with the reasons behind the price increase, show that there is no reason to worry about creating a bubble in the real estate market, but an adjustment to new price data. At this point it should be noted that alongside the rise in housing prices, private construction activity was activated and significantly increased with the issuance of multiple building permits - despite the new data on the increase in the cost of raw materials in building construction. There is also a big increase in residential investments in the last 2 years 2020 and 2021.
The immediate future will show whether prices will stabilize at the new data or climb to even higher levels.
Thanasis Stamou is the director of
INVESTA Real Estate - Larissa real estate agency. He has experience in the field of real estate since 2005. He is a real estate agent, appraiser, negotiator and investment advisor. Specializes in training Real Estate Consultants.
