Kostis Hatzidakis

Policies to accelerate the growth rate of the housing stock should be implemented by the government to ensure more affordable options for those looking for housing. According to the pan-Hellenic apartment price index of the Bank of Greece, from the end of 2017 until the end of the third quarter of 2023, the increase approaches 60%. The rent increases are similar or even greater as the case may be. This fact has made it difficult for thousands of households, especially young people, to own or rent a property.

According to recently published surveys, the significant increase in prices is attributed to the greater number of prospective buyers and renters than available homes. This imbalance between demand and supply was highlighted in a study by Piraeus Bank. As he calculated, at the moment there are about 212,000 properties missing from the real estate market to meet the housing needs of the country’s residents.

The new constructions

In more detail, he estimates that the total demand amounts to 197,000 new homes. However, new construction over the past 10 years has not exceeded 155,000, while an additional 170,000 homes are now short-term rentals. This difference, according to the chief economist of Piraeus Bank Elias Lekko, as a result, the rate of price increase has increased by 14% more than the rate that would be justified based on the evolution of macroeconomic parameters.

Therefore, in order to rationalize the prices, the aforementioned loophole must be closed. Part of it will undoubtedly be covered by new construction activity, which has doubled since the crisis years. However, if the potential of the domestic construction industry is taken into account, it will take about 5-6 years to increase the supply to the extent needed.

In this context, the economic staff of the government are looking for alternative ways to increase the available properties. In this direction, the following initiatives have been undertaken:

1. It starts soon “Renovate – Rent” program, which aims to increase the number of homes available for rent by 12,500 through the utilization of vacant homes, which will be rented for at least 3 years. The renovation cost will be subsidized by 40% up to the amount of 10,000 euros.
2. Her proposal is being considered POMIDA for zeroing for one three years of income tax from rents to those who rent as their main residence properties that are either short-term leased or vacant.
3. Construction of new houses on plots belonging to the State, with the consideration method. The contractor erects the building at his own expense and his consideration consists in the exploitation of the property for a certain period of time with a parallel obligation to rent part of it to beneficiaries, to be chosen by DYPA for a predetermined rent.

The hidden treasure

The banks believe that even if the above actions are carried out quickly, it will take some time to see the first substantial results in terms of sales prices and rents. Their respective managements believe that a faster return to the market of houses connected in one way or another with bad loans can make a significant contribution to solving the housing problem. Specifically:

• Banks have acquired through auctions about 15,000 homes from 2018 until today. However, their subsequent utilization in many cases requires considerable time. And this is because it presupposes the completion of the bureaucratic process for the transfer, the legalization of any irregularities, but also the restoration of possible damages, before they are put up for sale. There are also not a few cases where the former owner of the property must be evicted. These issues were discussed at the meeting of the Minister of National Economy and Finance Kostis Hatzidakis with representatives of the servicers last Friday. The latter called for initiatives to reduce the time between an auction and a property being back on the market to 2-3 months from up to 12 months currently.

Loan and credit management companies estimate that there are thousands of abandoned homes from red-letter borrowers that are still serving as collateral for defaulted debts. According to industry sources, a significant percentage of homes that are off the market because they have not been auctioned are currently vacant.

Provided they are allowed to be inspected on site and found to be uninhabited, foreclosure proceedings could be expedited and they could be acquired by creditors in exchange for the debtors’ debts being written off. Afterwards, the properties in question, after they have been repaired, renovated and legalized, can be grouped and, in cooperation with the State, allocated to groups of the population that meet specific economic and social criteria.

Banking programs

From the end of 2023, Greek banks offer mortgage loan programs with better terms and interest rates. Through them, those interested can finance the purchase of a residence with preferential fixed interest rates for a duration of 3-5 years and guaranteed reduced spreads thereafter. At the same time, the big groups are considering increasing the maximum financing rate from 80% today to 90%, exclusively to prospective borrowers whose credit rating indicates that the risk of default is low.

However, the responsible general directorates of the credit institutions keep a small basket for this year as well, after the stagnation recorded in disbursements on an annual basis in 2023.

They estimate that together with the ongoing “My Home” program, after the completion of the application process, the total allocations of the category will reach 1.8 billion euros.

Of these, it is estimated that 1.3 billion euros will be disbursed by them and the rest by DYPA, which runs the action of cheap housing loans for young people up to 39 years old.