DBRS Morningstar: Greek Housing Market Is Not Immune to the Coronavirus Disease

DBRS Morningstar released a commentary on the developments in the Greek housing market.

The Greek housing market retained its positive growth momentum in the first quarter of 2020 despite the start of the Coronavirus Disease (COVID-19) outbreak. After experiencing a long 54% decline from 2009 through 2017, property prices increased by 9% in 2018-19. Property prices grew an additional 6.9% from January to March 2020. Growing foreign investors' demand and improved domestic economic conditions have been the main drivers of the revival in the residential property market. However, the unprecedented economic shock caused by the pandemic likely will have had adverse effects on construction activity and real estate transactions in the second quarter of 2020, and raises uncertainty around the evolution of the market and prices in the second half of the year.

Given the high reliance on foreign demand, the outlook of the Greek housing market this year will largely depend on the evolution of the pandemic and the pace of recovery of the major foreign buyers' markets, their appetite for travel and to some extent their confidence in Greece’s flexibility and handling of the crisis. In DBRS Morningstar's view the longer term outlook of the Greek housing market will depend on Greece's ability to recover from the pandemic without experiencing any permanent damage in its labor market and its ability to strengthen investors' confidence by improving the long term prospects of the Greek economy and continuing with structural reforms.

“The recent effort to improve the functioning of the public administration by digitalizing a significant number of processes is deemed as positive, and if it continues at the same pace, it will be an important step in the government's strategy to reduce red tape and improve the business environment in Greece”, said Spyridoula Tzima, Assistant Vice President at DBRS Morningstar.

On the back of the stable macroeconomic and political environment along with Greece's residency by investment scheme for non-EU residents, as well as the fact that house prices had been suppressed for a long time by the prolonged crisis, Greece's property market became an attractive investment destination. Nevertheless, the reliance on foreign demand makes the housing market vulnerable to external demand shocks.

Notes:
The “Greek Housing Market Is Not Immune to the Coronavirus Disease” is available at www.dbrsmorningstar.com.

For more information on the impact from coronavirus, visit www.dbrsmorningstar.com or contact us at [email protected].

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