Greece is one of the bright spots in southern Europe as it recovers from years of crisis. Tourism earnings are strengthening, growth is returning, and fiscal dynamics are improving. Despite these macroeconomic gains, pressures are beginning to build beneath the surface. Frictions are visible across several sectors, but they appear to be most pronounced in real estate. Rents in Athens, the country’s capital, are now more than 50% higher than in 2019, while wage growth has been considerably more subdued. In other words, upward pressure in key macroeconomic variables is becoming increasingly concentrated in the housing market.
The housing market in Athens has experienced a sharp price increase.
The cost of real estate is one of the major indicators of growth. Its upward movement indicates that demand for real estate is on the rise. According to statistics, the Athens real estate market continues to see considerable movement despite still requiring improvement.
Additionally, the monthly rent of €500–€600 was common for studio apartments in dense urban areas before 2020. Nowadays, comparable units frequently appear in the range of €800–€1,100, depending on condition and transport proximity. Likewise, two-bedroom apartments in areas like Pangrati, Koukaki or Exarchia often reach €1,200–€1,600. Renovated units in prime central locations can reach €1,800–€2,000 monthly. The net average monthly salary is between €1,050–€1,200.
The crisis years created a root structural imbalance.
It is not sufficient to explain the rise in rents by demand alone. The sovereign debt crisis in Greece triggered delays in construction activity dating back to 2008. The rate of residential development came to a halt after 2010, and the pipeline of new dwellings never fully recovered before economic activity began expanding again. As tourism rebounded and investment flows strengthened, supply was unable to adapt to renewed demand.
According to banking sector studies, the estimated shortage of housing units in the major cities of Greece stands at approximately 180,000. The existing shortfall affects Athens the most, as the city is the economic centre of the country. Studies indicate that short-term rentals have absorbed around 150,000 housing units at the national level, many of which are located in the capital itself. In an environment where construction activity was limited, this stock outflow created tighter market conditions and greater competitive intensity among tenants.
This resulted in repricing occurring quickly rather than gradually. In a market where supply is limited, even minor changes in demand can cause a major price reaction. This is especially true in core neighbourhoods because they have the best connectivity and access to employment opportunities.
Housing Expenditure as a Macroeconomic Variable
As rent growth becomes more prominent, housing is not just a social issue but also a macroeconomic one. Data from Eurostat reveal that Greece has among the highest rates of housing cost overburden in the EU. Many city dwellers spend over 40 percent of their disposable income on housing. At this level, affordability is no longer only a household issue. It becomes a systemic risk.
Households that spend a large share of their income on rent reduce discretionary consumption. The ability to invest in education, start a business or purchase property weakens as savings accumulation slows and financial resilience declines. Overall, these behavioural changes can undermine some of the benefits of tourism and external investment. While growth may remain statistically positive, at the household level the recovery is uneven.
The changing trends in ownership indicate an ongoing structural shift. Greece is one of the European countries with the highest level of homeownership. According to Eurostat, it was approximately 77% in 2009. Aggregated data show that the ownership level has dipped below 70% due to affordability issues and tighter mortgage conditions. Residential sale prices in central Athens now start from €2,500 and reach €3,500 per sq.m, while prices are even higher in prime locations. Furthermore, expensive rents make it difficult for younger households to accumulate a down payment.
Influence of Guidelines and Adaptation System
Government responses have included housing support initiatives aimed at alleviating pressure on the cost of living. Nonetheless, in situations where supply is limited, financial assistance may not rectify the underlying structural imbalance. Without a significant rise in housing stock, any increase in liquidity could be absorbed into higher asking prices.
Urban legacies such as fragmented land use and infrastructure create challenges for the development of coherent and accessible urban systems.
Recovery and Livability
Athens is now at a crossroads. According to a press release from the Bank of Greece, international investors have invested over 1.7 billion euros in Greek real estate. The 50 percent rise in rents over the past five years indicates a structural repricing that alters the lived experience of recovery.
Rising house prices place pressure on a domestic economy that is still recovering from recession. Lower disposable income reduces domestic demand, which is one of the most direct consequences of this trend. In the previous year, the Greek economy has seen signs of recovery.
