Property valuation

Indicators - key for the valuation of real estate and the entire market in Greece: The criteria

The real estate market is one of the key drivers of the Greek economy, with its course affecting GDP, living standards and individual sectors and branches of the economy. Despite the recent rise in prices, according to converging survey estimates, interest in buying a home remains strong, as for many Greeks real estate is considered the safest means of storing wealth.

At the same time, international indicators show when a market may be close to overvaluation thresholds, while offering investors and buyers practical tools for more informed decisions.

But what is the importance of the real estate market for the economy and why should people be aware of it? As the Center for Financial Responsibility, implemented by doValue in cooperation with the Financial Economics Laboratory of the Department of Business Administration and Management of the University of Piraeus, points out, the correct understanding of the factors that shape prices and the existing risks is directly linked to social stability, since housing is the foundation of family and economic security. More specifically, according to the data presented by the Centre, the importance of the real estate market for an economy is reflected in five main axes:

Economic impact with a strong footprint on society and the banking system:

The real estate market contributes significantly to GDP through investment, construction activity and transactions in residential, commercial real estate and tourism infrastructure. Price fluctuations affect inflation, purchasing power and the stability of the financial system, as housing loans constitute a large part of bank financing. A means of storing wealth and investment: For most people, buying property is the largest investment they will make in their lifetime. Real estate is considered a stable asset, with long-term value retention and income generation potential through rental income. In unstable economies, they act as a 'safe haven' against inflationary pressures and financial crises.

Social and family importance:

Housing is not just an economic transaction, but the foundation of quality of life. Home ownership provides stability, security and family well-being. Market trends affect the urban landscape, travel, social cohesion and access to basic services.

Business and growth opportunities:

The real estate market includes not only residential, but also commercial space, tourism properties and land investments. Infrastructure development, smart building technology and energy efficiency influence the choices of investors and users.

Reflection of financial health:

The state of the market acts as a barometer of the economy. A rise means growth and confidence, while a crisis like the one in 2008 had an impact on the financial system and society.

Against this background, understanding the dynamics of the real estate market is critical for investors, individuals and policy makers.

Indicators for the evaluation of housing

Another important dimension analysed by the Centre concerns the assessment of whether a house is cheap or expensive through internationally recognised indicators. Often, buyers rely on their personal feelings or comparisons with people they know, but the numbers give a calmer and more objective picture.

Specifically, according to the Center for Financial Responsibility's briefing note, the first indicator is the Price-to-Income Ratio, which measures how many years of net annual income are required to purchase an average home.

Values between 3 and 5 are considered good, 6 to 8 marginal and above 8 a possible overvaluation or bubble. For example, if a property costs €200,000 and a household's net annual income is €20,000, then the index is 10, indicating a high cost relative to income.

The second indicator is the Price-to-Rent Ratio, which compares the purchase price to the annual rent, showing which option, buying or renting, is more advantageous. Levels of 10-15 mean that buying is advantageous, 16-20 a balanced relationship and above 20 that renting is probably advantageous. By inverting the index, the annual gross yield is calculated, e.g. an index of 20 equates to a 5% yield. These ratios are not a substitute for individual needs or preferences, but are a key tool for avoiding excesses and making decisions based on data rather than expectations.

These indicators, it is pointed out, are not a substitute for the personal assessment or the needs of each buyer, but are objective tools to assess the market with equanimity. Knowledge of these indicators helps to avoid exaggerations and bubbles and to base decisions on data, not just on expectations

Their combined use helps to identify potential overvaluation and ensure greater market transparency. As the analysis by the Centre for Financial Responsibility shows, housing is not only a financial asset but also a social pillar.

Stability in this area contributes to family security, social cohesion and the wider resilience of the economy. There are also a number of reliable indicators for the real estate market in Greece, which provide insight into prices, trends and market dynamics, whether for residential or commercial property. These indicators are published by institutional bodies, banks, real estate networks and research institutes. The information note mentions, among others:

The House Price Index - Bank of Greece (BoG)

The most official and reliable indicator in Greece. It provides data on the prices of old and new houses, separated by region (Athens, Thessaloniki, large cities, rest of the country). Updated quarterly. It has separate indicators for rents, commercial properties, etc.

Commercial Real Estate Indicators - ELSTAT & ICAP

Statistical data on new construction, building permits, construction value. Useful for monitoring building activity.

Investment Demand Indicators - Enterprise Greece, Golden Visa Stats

Data on foreign investment in real estate through Golden Visa. Indications of price pressures in specific areas (e.g. Athens centre, southern suburbs, islands).

The real estate market acts as a mirror of a country as in boom times it fuels growth, boosts confidence and creates opportunities. In times of crisis, maintaining its balance is critical to protect households, investors and the stability of the financial system itself. Knowing the indicators, understanding the market drivers and adapting to new technological and energy demands can make the difference between healthy and sustainable growth and a cycle of overvaluation that leads to a crisis.

At a time when housing is at the centre of the public debate, information and responsible decision-making remain the best guarantees for a market that serves both the economy and society.