Banks and its agencies foresee a mild correction of house sale prices real estate market for 2024, as, as they estimate, the “rally” of the last two years is coming to an end. Of course, the common denominator of the estimates is that values will continue to rise overall, but at a decidedly slower pace, while there will also be areas of lower demand, where a stabilization, or even a small decline in sales prices may be observed, in order to facilitate the sales.
The “tone” was set by the Bank of Greece itself, just before it “expired” in 2023, noting in its report on monetary policy that “the first indications have been identified, possibly pointing to an imminent period of price correction, especially for uses , properties and locations in lower demand. According to the BoE, “expectations for the next period remain moderately positive, under the influence of international developments and the environment of high inflation, increased interest rates and uncertainty, which directly affect Europe and the global economy as a whole. At the same time, the change in demand characteristics, which began during the pandemic period, continues to this day, with specific property categories and locations attracting disproportionately high investment interest, reinforcing the image of a market of different speeds. To the extent that demand from abroad will be maintained and the supply of quality properties will remain limited, prices are estimated to continue their upward path in the high-end segment of the market, dragging prices upwards in the secondary markets as well. The rates of price growth are expected to become milder, however, as the current situation does not allow investors to be complacent about the medium-term evolution of market conditions”, concludes the Bank of Greece.
In a recent analysis, Alpha Finance reported that the average annual rate of price growth over the period 2023-2025 will be just 3%. As the company’s relevant analysis states, this is a forecast supported by both the European Banking Union and the European Central Bank. The National Bank of Greece appears more optimistic, which notes in its own analysis of housing sales prices, that their average increase for the period 2023-2024 will reach 7%. Overall, for the period from 2025 to 2030, the National Bank predicts an average increase in sales prices by 5% on an annual basis. Accordingly, Cerved Property Services estimates that house values will continue to rise in both 2024 and 2025, but at a milder rate of increase compared to previous months. In particular, in 2024 house sales prices are predicted to increase by 5.5% and in 2025 by 4.1%.
During the fourth quarter of 2023, the asking sales prices recorded an increase compared to the third quarter.
It is worth noting that according to the price indices edited by the Central Bank, during the nine months of last year, the prices of apartments (in nominal terms) increased by 13.9% on an annual basis, against an increase of 11.2% during the corresponding period last year . Among the individual geographical zones monitored by the Central Bank, Thessaloniki recorded the largest price increase with 16.5% year-on-year, followed by Athens with an increase of 14.5%. At the same time, the prices of old apartments (over five years old) increased at an average annual rate of 14.4%, compared to 13.1% for the prices of new apartments.
Based on the house price index Spitogatos Property Index (SPI), the eponymous online classifieds network, during the fourth quarter of 2023 asking sales prices recorded an even faster increase compared to the third quarter. In particular, the average annual increase reached 14.8%, compared to an increase of 13.6% in the third quarter. The average selling price is 2,293 euros/sq.m., compared to 2,230 euros/sq.m. which was during the immediately preceding quarter.
This development demonstrates the widening gap separating sellers’ expectations and market reality, based on the level of demand. As real estate sources note, home sales are showing a downward trend throughout the second half of 2023, as the number of buyers who can afford these prices has been limited. The increase in interest rates also works negatively on the level of buyers’ expectations. In this context, properties which have no investment interest and are therefore exclusively aimed at the domestic market, should register a correction of their requested prices, in order to attract purchasing interest. Otherwise, they will remain unsold for a long time.
