2024-09-24 00:59:12
At low levels and far from the “golden period” of 2006-2008, investments in housing are still moving, intensifying the reflection on the evolution of the housing problem.
In the first half of this year, ELSTAT recorded an 8.3% decrease in housing investments, compared to the same period last year, which are still down more than 82% compared to the distant 2007.
The limited investments in housing also act as an obstacle in the effort to reduce the so-called investment gap. The participation of investments in Greece in the GDP remains in the first half of 2024 much lower compared to the European average, as – despite the available funds from the Recovery Fund and the NSRF the total investments, as reflected in the “gross fixed capital formation “, remain reduced by more than 45% compared to 2007.
Comparative sizes
The second quarter of 2024 was the third consecutive decline in housing investment. In the fourth quarter of 2023, we had a reduction in investment activity from the 1.156 billion euros that was in the fourth quarter of 2022 to 968 million euros.
In the first quarter of 2024 investments were limited to €948 million from €1.075 billion in the first quarter of 2023 and in the second quarter of 2024 we had a decrease to €1.018 billion from €1.07 billion in the second quarter of 2023. A comparison with the corresponding pre-crisis period does not fit: it is enough to note that in the first half of this year investments totaled 1.966 billion euros compared to 2.144 billion euros last year (note: this is how the 8.33% decrease ), with the corresponding figure for 2007 standing at 10.949 billion euros. To what reasons is attributed this inability to increase investment in housing, despite the given demand observed, but also the lack of at least 200,000 housing units based on the relevant estimates?
- The restrictions adopted by the government for the granting of the Golden Visa have started to pay off. The period in which a decrease in housing investment is recorded coincides with the beginning of the imposition of restrictions, that is, the increase of the limit even to 800,000 euros in popular areas, which limits the number of prospective investors.
- The increase in the prices of building materials, plots of land, and daily wages (the great lack of available labor also plays a role here) increases the concern of builders about the possibility of newly built apartments remaining unsold, locking up capital. The… project has been known since 2006-2007, when the outbreak of the construction crisis left many apartments unsold, which remained vacant for years and eventually several of them were sold at cost or even lower, depending on the developers’ liquidity needs . Since property prices are rising faster than income, prospective buyers are required to commit an ever-increasing portion of income. Also, a faster increase in selling price than income means that an ever-increasing number of prospective buyers are automatically excluded from bank lending, and therefore also excluded from the market.
- Rising property prices limit future returns for those who want to treat the purchase of a home as an investment. When the purchase price of a property is such that it requires more than 20 years of rent to be collected just to recoup the investment, then the investment move is not very attractive.
- In the first months of 2024, the government’s announcement on the mortgage subsidy program has also played a role, but without being accompanied by a complete clarification of the landscape regarding the conditions. Even today, the mortgage market remains almost frozen as prospective borrowers wait to see if they will join the €2bn scheme, which will start running from early next year.
The total investments
Overall, investment increased in the first half of 2024 compared to the corresponding period in 2023, but not at the desired rate. The gross formation of fixed capital amounted to 15.846 billion euros with the growth rate being 5.74% compared to last year (14.897 billion euros investments in the first half of 2023). This means that housing investment as a share of total investment lost an even bigger share, to 12.4% from 14.3% just a year ago and 37.5% in 2007 at the peak of growth. of construction activity.
A leading role in this phase is played by investments in mechanical and transport equipment, which in the first half of 2024 collected 7.138 billion euros from 6.505 billion euros last year.
Investments in other constructions, excluding housing, also moved upwards, reaching 3.967 billion euros compared to 3.685 billion euros in the first half of 2023.
With these performances, the participation of investments in GDP and the closing of the so-called “investment gap” is happening at a very slow pace.
The share in H1 2024 now stands at 13.83% with very little growth compared to 13.75% in H1 2023. The share from 2021 onwards is still up by less than one percentage point unit (12.93% in the first half of 2021, 13.17% in the first half of 2022 and 13.75% in the first half of 2023). In order to reach the average European level, which is still more than 20% today, it will be necessary to more than double the investments. 2025 will be extremely critical, the year of “maturation” of several investments that will be financed with resources from the Recovery Fund and the NSRF.