Due to a steep increase recorded in the sales prices of old and new apartments in Attica, property ownership seems like a midsummer night’s dream. New building requirements increase the most, complicating the acquisition of a house for the younger generation, who might turn to renting (Generation Rent).
For newly built apartments, the increase was approximately 25% in the last year and 35.42% compared to the prices two years ago in five regions of Attica: Ambelokipoi, Marousi, Palaio Faliro, Peristeri and Cholargos, as shown by the research of the Apartment Valuation Observatory of the counseling valuation company Geoaxis Property & Valuation Services.
Cholargos, the region with the sharpest increase
The highest prices were recorded in Cholargos (3,565 Euro/square meter from 2,784 Euro/square meter, with an annual increase of 28.05%) and then, in the following order: the Palaio Faliro region (2,950 Euro/square meter from 2,465 Euro/square meter with an annual increase of 19.68%), in Marousi (2,856 Euro/square meter from 2,267 Euro/square meter with an annual increase of 25.98%), in Ambelokipoi (2,500 Euro/square meter from 1,992 Euro/square meter with an annual increase of 25,50%) and last in Peristeri (2,029 Euro/square meter from 1,615 Euro/square meter with an annual increase of 25.63%).
According to the Observatory, between the third trimester of 2022 and the third trimester of 2021 we observe an annual increase of 24.97% for newly built apartments and 24.34% for the older ones. Based on the above, Cholargos recorded the highest annual increase and Palaio Faliro the lowest, compared to all the other regions.
*In newly-built apartments of a surface area of 93 square meters, of an average age of 1 year on the second floor.
Older apartments also follow this increase trend
For old apartments, the increase is also extremely high at 24.34% compared to a year ago and 32.08% compared to two years ago. For old apartment of an average surface area of 90 square meters, an average age of 42 years old and on the second floor, the study showed that the mist significant increases were recorded in Cholargos (1,985 Euro/square meter from 1,499 Euro/square meter with an annual increase of 32.42%) and then, in the following order: in Marousi (1,620 Euro/square meter from 1,275 Euro/square meter with an annual increase of 27.06%), in Palaio Faliro (1,536 Euro/square meter from 1,301 Euro/square meter with an annual increase of 18.06%), in Ambelokipoi (1,313 Euro/square meter from 1,036 Euro/square meter with an annual increase of 26.74%) and last in Peristeri (1,268 Euro/square meter from 1,080 Euro/square meter with an annual increase of 17.41%).
Based on the above, Cholargos recorded the highest annual increase and Peristeri the lowest, compared to all the other regions.
“The steep price increase of the above sample can be explained by the fact that, due to the significant decline in offer, following a very good tourist season and the introduction of many apartments in Airbnb or Blue ground type platforms, this year’s sample mostly includes the much newer and more expensive apartments. We believe that this increase in value has reached the summit of the current cycle. The next stage will be correction” according to Giannis Xylas, CEO of Geoaxis.
When will these increases stop?
This rapid increase in prices should be reined in in the next couple of months due to the shrinking demand caused by:
- The increase of interest rates
- The rapidly increasing price of energy and
- The increase of the price of building/ renovation materials, facts which will lead probable buyers to wait for a change in these factors.
“In no case is the market currently experiencing bubble conditions, since offer (especially concerning newly-built apartments) remains very limited”, estimates Mr. Xylas.
The new building regulations increase cost
The adoption of ESG requirements concerning the environment, society, corporate governance, the emergence of health and hygiene protocols, the need for new smart technologies and versatile spaces as well as the turn to a better way of living are expected to create new data for future buildings with a sharp, however, increase of building cost, and as a consequence to selling prices, adding in turn more difficulties to the acquisition of housing for the younger generations, obviously leading to renting.
The progressive conversion of apartments into working spaces is expected to bring about major changes in the design, building and renovation of such apartments (materials, networks, insulation, big communal spaces, etc.). We believe that despite the low performance rates, apartments will be included more and more in the portfolio of companies investing in property and investors in the next few years.
Generation Rent
This inability of a significant percentage of the youth today to acquire the ownership of a home characterizes this generation (Generation Rent), which is expected to dominate in the next decades even in countries with a high rate of property ownership such as Greece and Spain.
The diachronic widening disparity between the increase of the minimum salary and the value of property is revelatory and explains in financial terms this turn towards renting. It is a characteristic feature of our country that between 1998 and 2019 the minimum salary which is adapted to inflation has slightly decreased, while the value of apartments has increased by 57% according to the indexes of the National Bank of Greece.
In Great Britain, these different speed rates are even more pronounced since during the last 20 years, property prices have increased by 173%, while salaries only increased by 19%. Additionally, the consecutive financial crises, the tightening of the bank criteria for loans, job insecurity, the fact that young people live at the family residence for a longer time, the decrease in marriages/ births and the failure of the state to regulate the market via programs which involve building cheap residences, create the perfect conditions for the youth to avoid taking the risk of purchasing a house.
