The factors that will determine the Greek real estate market
In the Greek real estate market, rents continue their upward trend, inflation in construction materials is running faster than the average index, construction activity is shrinking due to pending issues in the New Building Regulation, and sales prices are reaching new historic highs. Critical parameters include the government’s efforts to stimulate the supply of real estate, the course of interest rates, and the prospect of utilizing more European funds to cover housing needs.
Investors are cautious at this stage, as sales prices and construction costs are at their highest level ever, increasing the risk. Below are presented the main parameters, according to the authoritative Naftemporiki newspaper, that will determine the future course of prices, returns on real estate investments, and housing costs in the coming period.
1. Construction activity
The recent decline in construction activity is mainly attributed to delays caused by changes in the Building Regulation. In several areas, the issuance of building permits has been frozen, which is clearly reflected in the statistics. 2025 will be the first year after 10 years to see a decline in the number of building permits issued. From 2016 to 2024, there was a steady increase year per year, resulting in a rise from just 12,641 permits in 2016 to 30,678 in 2024. The first four months of 2025 closed with 8,300 permits compared to 11,360 permits in the corresponding period of 2024, and the decline is expected to continue. In any case, construction activity is no longer comparable to the levels of 2007 and 2006, when more than 75,000 building permits were issued per year.
2. Taxation of rents
The government is considering changes to the tax scales for rental incomes, with the aim of encouraging long-term rentals and increasing compliance. The final decisions will also determine the net return for landlords when entering into long-term leases. The aim is to create an incentive to utilize real estate. It remains to be seen whether the government will focus on providing relief to the many owners who declare less than €12,000 per year as income from real estate or whether it will target the few owners with the highest incomes.
3. Property tax
ENFIA remains firmly under scrutiny. The government has already made it clear that it will not readjust the objective values in 2026, which would have a big impact on ENFIA tax bills. This does not rule out changes aimed at stimulating the supply of real estate. The scenario of ENFIA being calculated based on whether the property is in use or not remains on the table, and final decisions are awaited.
4. Vacant properties
Thousands of properties, mainly in Athens and Thessaloniki, remain vacant due to the need for renovation or the owners’ decision not to sell them. The government is working on incentive programs, through renovation subsidies and tax breaks, to increase the supply of affordable housing. If these are implemented, they could affect the balance of the market. Incentives to utilize vacant properties have already been activated (subsidies and tax-free rents), but their effectiveness remains limited for the time being.
5. Short-term rentals
The debate over restrictions on short term rental platforms is in full progress. Municipalities are calling for limits on the number of days available or on properties per owner, with the aim of freeing up stock for long-term rentals. Owners, on the other hand, warn of lost revenue and reduced tourism supply. The extension of the ban on the center of Athens is considered a given, and the geographical expansion of the restrictions is likely. In 2025, a new record was set for the number of properties available for short-term rental.
6. Real estate offer
Low construction activity and delays in renovations are keeping supply limited, while demand remains strong. In Athens in particular, there are few properties available to rent and they are often overpriced. Without new projects or the return of vacant properties to the market, the pressure will not ease.
7. Construction costs
Price increases for basic materials such as iron, aluminum, insulation, and frames continue to exceed 10% annually, surpassing average inflation. This makes both new construction and renovations more expensive, leading to higher final sales and rental prices. Construction costs are now estimated at over €2,000 per square meter for properties intended to meet housing needs.
8. Interest rates
The course of the ECB’s monetary policy will be decisive. Any reductions may revive demand for mortgages, but if the reductions are delayed, the purchasing power of many households will remain limited. Banks are already offering fixed-rate packages for 5 or 10 years in an effort to attract customers who prefer fixed borrowing costs.
9. Rent levels
Rents in Athens, Thessaloniki, and other major cities for students are at levels that absorb more than 40% of the income of many households. The upward trend is now spreading to smaller tourist towns. The annual rate of increase remains at levels above 11%.
10. European funds
The Recovery Fund and other European subsidy programs can finance actions for affordable housing and energy upgrades. The question is whether there is scope for increasing the resources available to finance new programs. The scope for modifying the program is limited, while it is also crucial whether the Recovery Fund will be completed in August 2026, as planned.
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