Real Estate: Concern for further rent increases

Further increases in rent prices have caused concern in the market. This will become more acute from the end of August onwards, when either old contracts are usually renewed or students seek housing ahead of the academic year. The rise in construction costs seems to be reinforcing the increase for newly built units.

Market pundits estimate that there will be further increases in the very near future, leaving open the possibility of a downturn in the midterm. High inflation, combined with rising interest rates that make it more difficult to buy a home, may contribute to this. However, the situation is particularly dire for tenants.

Greece: “Champion” in housing costs

According to Eurostat, one in three Greeks (33.3% of the population) spends more than 40% of their disposable income to meet housing needs. It is worth noting that this percentage is more than double that any other EU member. These costs include rent, or mortgage payments, as well as heating, water, electricity, telephony and utilities.

Because these figures are from 2020, the current conditions are even worse, as housing costs have risen sharply, both due to rising energy prices and in terms of rents.

Other countries

On average, 7.8% of EU residents spent at least 40% of disposable income for housing costs. However, there were very large differences between Member States. In 13 Member States this figure was below 5%. The percentage was lower in Cyprus (1.9%), Lithuania (2.7%), Malta (2.8%) and Slovakia (3.2%).

On the contrary, the highest percentage was recorded in Denmark (14.1%), Bulgaria (14.4) and first by far was Greece (33.3%).

Q1 rent increases

At the same time, apartment prices in Greece increased by 8.6% on average in the first quarter of 2022, compared to the corresponding quarter of 2021, according to data announced by the Bank of Greece. The prices of new properties increased at an annual rate of 10.3% and those of old ones by 7.4%.

The largest increases were in Athens, where the annual growth rate was 9.7% compared to 8.3% in Thessaloniki and 8.2% in other major cities and 6.4% in other parts of the country.

For 2021, apartment prices increased at an average annual rate of 7.4% (revised figures), compared to an increase of 4.5% in 2020.

Athens and Thessaloniki

The analysis of data by geographical area shows that the increase in apartment prices in the first quarter of 2022 compared to the corresponding quarter of 2021 was 9.7% in Athens, 8.3% in Thessaloniki, 8.2% in other major cities and 6.4% in other parts of the country.

According to data from the Knight Frank Global Real Estate Consultants, house prices in Greece increased by 9% in the first quarter, compared to the corresponding period of 2021, with the specific percentage being 10.2% in 56 monitored countries. However, controlling for inflation, the rise in house prices in the first quarter of 2022, compared to the corresponding period of 2021, is set at 3.7%. This is still higher than the 3.3% increase in the 56 markets analyzed by Knight Frank.

Rise in office space rents

Office space rents increased by up to 12% year-on-year and by an average of 8% during the first quarter of this year, both due to rent adjustments, rising inflation, and rising demand, while quality space remains limited. Increases range between 12% and 2.78%, from last year.