Construction inflation is running high compared to the consumer price index (1.6%). More specifically, the price index of building materials rose 6.4% in September.
Therefore, conditions for the Greek real estate market are becoming more and more difficult. The negative growth rate of housing loans on the one hand and the continued rise in the prices of building materials on the other limit the possibilities for both the renovation of existing properties and the construction of new ones.
The increase in the cost of building materials forces construction companies to raise the selling price of the property in order to maintain the profit margin. But the more the price goes up, the less the demand for buying new properties. Meanwhile, the Bank of Greece (BoG) announced a further reduction in the balance of housing loans, making the conditions in the real estate market even more pressing.
In comparison with September 2022, the price index for new building materials showed an increase of 6.4%. The rate is lower than +12.4% recorded in September 2022 compared to September 2021. However, the increase works in a cumulative manner. It is indicative that the general price index for building materials for new residential buildings has risen by 19.6% in the last two years (or from 104 to 124 units) when from 2015 to 2021 it rose only 4%. The upward trend continued in September, even on a monthly basis. The general index showed an increase of 0.4% versus an increase of 0.9% recorded in the corresponding months of the year 2022.
