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Greece house price crash: Are an overheated economy and high inflation setting the scene for another property price bubble?

By Fitri Wulandari

Edited by Vanessa Kintu

10:54, 15 December 2022

Roundabout with traffic signs in the city of Heraklion in Greece near the port. It shows the solution for traffic regulation instead of classic crossroad.
Are an overheated economy and high inflation setting the scene for another property price bubble? Photo: Luciavonu / Shutterstock

Greece’s housing market has survived two house price crashes since 2008. In the last five years, house prices have boomed, owing to strong economic growth and low interest rates. The most recent data showing prices increased by 11.2% in the third quarter of 2022.

However, with rising energy costs and rising interest rates increasing borrowing costs, is Greece’s property bubble about to burst?

In this article,  we look into historical and recent data as well as factors that shape house prices to predict if a Greece house price crash is underway.

What is a housing crash?

Property, like many other assets, experiences a boom and bust cycle. A housing market bubble occurs when house prices rise rapidly and exceed their underlying value.

House prices typically rise as a result of low mortgage rates and improved living conditions, which drive demand higher than supply in the market. When house prices continue to rise to unsustainable levels and demand falls, the bubble could burst, causing the property's value to fall.

The condition where the house prices drop after skyrocketing is often referred to as a housing market crash.

Several factors contribute to the housing market crash. Mortgage rates can rise as a result of a central bank raising interest rates. If homeowners are unable to meet the new, higher mortgage payments, they may face foreclosure. This will increase the number of homes on the market for sale.

Falling household incomes as a result of inflationary pressures or job losses during recessions can also reduce housing demand.

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House price crashes in Greece: Historical context

According to Global Property Guide, Greece’s housing bubble saw property prices skyrocket in the early 2000s. In particular, the prices of homes near the sea rose between 30% and 40% annually in 2004.

Greece’s house prices bubble burst in 2008 as the global financial crisis in 2007-2008 hit the country’s economy and began prolonged recessions that lasted until 2017.

Prior to 2007, Greece’s economic growth was driven by strong domestic demand fuelled by public and private borrowing. At the same time, revenue lagged behind government spending. This resulted in large deficits and historically high government debt that evolved into a sovereign debt crisis, according to the Bank of Greece, the country’s central bank, in its report The Chronicle of the Great Crisis - The Bank of Greece 2008-2013

Greece’s economy deteriorated and officially entered recession in 2009. The country’s gross domestic products (GDP) fell by 3.2%, the deficit rose to 15.7% of GDP and public debt accounted for 129.7% of GDP.

From 2009 to 2013, Greece’s economy recorded negative growth, with the sharpest contraction happening in 2011 at -10.15%, according to Macrotrends. The economy briefly recovered in 2014, before falling to negative growth in 2015-2016 and emerging from recession in 2017.

Greece GDP growth

Household income in Greece shrank by 33% in 2009-2017, according to research by Alpha Bank in 2020. House prices fell by 42.5% from 2007 to 2017, according to Global Property Guide.

In its report, Alpha Bank wrote:

“With over a third of households unable to meet tax obligations and keep up with house loan repayments, real estate prices were greatly compressed… From the supply side, the real estate market boom in the early ‘00s led to an overabundance of housing, with Greece reaching a very high homeownership ratio as mentioned above, which in turn pushed prices further down.”

From 2010 to Q2 2022, the housing market in Greece recorded a 22.5% decrease in house prices – the sharpest decline among 24 European Union’s members, according to data from Eurostat, the EU’s statistics office.

Greece’s house prices began to recover in 2017, with the annual price decline rate falling to average 1%, compared to the annual average decrease of 2.6% in 2016, according to the Bank of Greece.

In the following years, residential property prices in Greece continued to rise, with average growth of 1.8% year-over-year (YOY) in 2018, surging to 7.2% in 2019.

The growth of Greece’s house prices slowed to an annual rate of 4.2% in 2020 during the Covid-19 pandemic. However, it picked up at an annual rate of 7.1% over 2021.

Greece house price index 2012-2022


0.56 Price
-11.690% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168


2,432.97 Price
-1.070% 1D Chg, %
Long position overnight fee -0.0197%
Short position overnight fee 0.0115%
Overnight fee time 21:00 (UTC)
Spread 0.30


3,418.20 Price
-0.030% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00


19,767.20 Price
-0.260% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 1.8

Factors contributing to house prices in Greece

Over 2022, house prices in Greece’s real estate market continued their robust growth at an annual rate of 11.2% in the third quarter, compared to 9.8% YOY growth in the first quarter of 2022.

According to Alpha Bank, real annual housing investment growth gained 18.6% in the first quarter of 2022. Property prices in the housing market in Greece rose by a total of 20% from 2018 – the start of the recovery – 2021, partially recouping the losses from the prolonged recession from 2009 to 2017, the bank showed in the report.

Robust growth in the residential property prices came as Greece – like all European countries – are battling soaring inflation and high interest rates.

While the latest readings showed positive signs, there are factors that may influence the direction of house prices in Greece.

Adverse impact from the Ukraine war

The war in Ukraine could affect Greece’s real estate market by driving up the price of construction and materials, according to Alpha Bank. Prices of building materials rose at an annual rate of 11%, and 9.4% average growth in the first four months.

Materials that recorded the highest annual increases were electric energy, diesel fuel and bricks, according to ELSTAT, the Material Cost Index for the Construction of New Residential Buildings, as cited by Alpha Bank

Another factor is the potential postponement of investment projects and Foreign Direct Investment (FDIs), which could squeeze the supply of housing in the medium term, the bank added.

Slowing economic growth

The European Commission in its Autumn Economic Forecast projected Greece’s GDP growth to slow considerably to 1% in 2023, from 6% in 2022 on weakening economic activity and rising inflationary pressure.

“Households are expected to adjust their consumption decisions to higher prices and the associated erosion of real incomes. Amid high uncertainty, tighter financing conditions, rising input costs and slowing demand, investment growth is likely to lose pace, but continues to be supported by the Recovery and Resilience Plan.”

The country’s economic growth was expected to rebound to 2% in 2024 as inflation declines.

High borrowing costs

High interest rates could affect demand for residential property in Greece. The European Central Bank (ECB) has had three rate hikes since it started the tightening cycle in July, taking the policy rate to 2% in November from 0.50% in July 2022.

Housing loans’ interest rate in Greece has been increased to 4% in October 2022, from 3.01% in August 2022, the Bank of Greece announced on 2 December.

On 14 November, ABN-Amro Group expected the ECB to continue raising policy rates to 2.5% in the first quarter of 2023 to bring inflation down. The central bank is projected to start cutting the rates in the final quarter of 2023.

Greece housing market predictions for 2023 and beyond

Will Greece's housing market set for another bust cycle next year?

The growth of house price rises in Greece is set for a slowdown in 2023, after five years of rapid rises, according to real-estate service The Greek Guru.

Citing Theodoros Mitrakos, former deputy governor of the Bank of Greece, the Greek Guru noted on 2 November that housing prices could continue to rise but at a slower pace in the coming quarters on a rising interest rate and shrinking household income.

Household income after deducted by tax in Greece is expected to drop by 20% through to 2024 with only a portion covered by a wage hike, Mitrakos said in the report.

On 14 December, Trading Economics’ forecast the housing index in Greece could trend around 80.00 points in 2023, slightly up from an estimated 78.00 points by the end of the fourth quarter of 2022.

Final thoughts on Greece house price crash

Analysts in this article suggested that inflationary pressure and high borrowing costs could slow the pace of house prices rise in Greece. However, they did not indicate that Greece’s house price crash was imminent.

When considering investing in the Greek property market, you should conduct your own research by reviewing the most recent news, technical and fundamental analysis, and a variety of analyst commentary. However, keep in mind that analysts’ Greece’s housing market predictions can be wrong.

Keep in mind that past results do not guarantee future performance. And never trade money that you cannot afford to lose.


Is there a housing crisis coming in Greece?

House prices in Greece still record a strong annual growth of 11.2% in Q3 2022. A report from Alpha Bank showed the housing market has been recouping its losses partially from the Greece house price crash in 2008 to 2017.

Is Greece’s housing market a bubble?

While housing prices in Greece recorded growth up until the third quarter of 2022, it has not yet returned to the level before the house price crash in early 2008.

Will house prices drop in 2023?

No-one can say for sure. As of 14 December, Trading Economics’ forecast suggested house prices in Greece may rise in 2023. However, analysts’ predictions could be wrong and have been inaccurate in the past. Always do your own research before making any investment decisions. Remember to never invest more money than you can afford to lose.

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