Andreas Andreou
The real estate market has been steadily rising since 2015, marking the ninth consecutive year of growth in the sector. However, this broad trend has not been without fluctuations, particularly influenced by the economic disruptions of the pandemic era. Monthly analyses of transaction numbers and volumes from this platform illustrate these ups and downs.
Questions occasionally arise regarding whether the market is heading towards a bubble that could burst. In 2021, such debates were intense, with arguments presented for and against, eventually confirming no bubble burst but rather continued upward movement in the market.
Similar concerns are being raised today, drawing parallels to 2008 and the possibility of another bubble burst. Certain statistics contribute to this discussion. For instance, in 2008, the sector's total production value was nearly €5 billion, dropping to €1.7 billion by 2014, then rebounding to €5 billion in 2021 and reaching approximately €5.5 billion in 2022. While official figures for 2023 and 2024 are not yet available, projections hint at approaching €6 billion.
In terms of housing stock, there were 394 thousand units in 2008, rising to 482 thousand by 2022—an increase of about 90,000 units. Notably, annual growth rates varied significantly: averaging 4.2% between 2002 and 2008, 0.7% from 2013 to 2018, and 1.5% from 2019 to 2022.
During the acknowledged bubble period from 2005 to 2008, annual housing completions ranged from 16,500 to 18,000 units, tapering slightly until 2010. However, by 2014, completions had dropped to 2,700 (bottoming out at 2,400 in 2015), with figures remaining modest until 2017. Subsequent years saw a gradual increase, with around 9,000 new units annually—approximately half the levels of 2008.
Today, the question of whether a bubble exists warrants analysis. Defined by rapidly escalating prices driven by constrained supply and strong demand, the market dynamics can create a "seller's market" scenario, where sellers dictate terms due to limited alternatives for buyers, buoyed by accessible financing options.
Examining current conditions, domestic demand is perceived as weak due to economic challenges, while international interest has been subdued following geopolitical events. Moreover, high interest rates have constrained borrowing and curtailed new investments.
Yet, signs of new supply are evident, with ongoing construction projects visible across the landscape, including multi-family residential buildings, duplexes, and mixed-use developments.
In conclusion, with neither severely restricted supply nor overwhelming demand coupled with easy borrowing, the evidence does not support the existence of a bubble today. Therefore, similar to the assessment in 2021, there is no indication of a bubble in the current market climate.
Andreas A. Andreou, MRICS, is CEO of APS Andreou Property Strategy - Chartered Surveyors.
[This op-ed was translated from its Greek original]
