“Cash” is the name of the game and not “loans” in the property market, and 2022 figures show that Greeks are putting their hands in their pockets to acquire a home instead of a loan.

The increases in service costs due to the jump in interest rates by 10 points last year contributed to this, but also the incentive for tax-free parental benefits of up to 800,000 euros.

According to bank executives’ estimates, more than 80% of real estate transactions are done in cash. In 2022, mortgage loans of €1.1 billion were disbursed to 14,000 borrowers, when total transactions are at least 10 times larger.

It is indicative that only the transfer tax in one quarter reaches 150 million euros. The total turnover in the market has exceeded 10 billion per year in recent years.

Conclusions

From a look at the data of the Bank of Greece, in the report on financial stability of 2022, four very important conclusions can be drawn:

This reflects the increase in interest rates, as the cost of borrowing increased by about 10%, while at the same time paying installments “eats” at income. This means that if the installment at the beginning of 2022 was 500 euros, at the end of the same year it increased to 550 euros. Service cost at approval was 22-24% and at the end of the year it increased to 32%.

When the loan was approved, the amount corresponded to close to 62% of the property’s value, while at the end of the year it reached 74%. This means that during this time there was either an additional disbursement (increase in the total value of the loan), or the value of the property decreased, e.g. due to age.

Total mortgages are 3.8 times the borrowers’ annual disposable income.

96.9% of the disbursements concerned the purchase of properties for owner-occupation, while only 3.1% concerned loans for the purchase of residential properties for rent.

Although mortgage disbursements were set at 1.1 billion euros in 2022, increased by 42% on an annual basis, they remain low in absolute terms and in comparison with the total turnover in the Greek real estate market and with the level before the global financial crisis. Indicatively, consumer loans also reached 1.1 billion euros in 2022.

During 2022 there was no relaxation in the criteria for the approval of mortgage loans.

The market share of the four systemic banks of major credit institutions in terms of disbursements of loans secured by residential real estate amounted to 94.6% in the fourth quarter of 2022.

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