The rise in construction costs in recent months is slowing the development of new housing, according to a new report by the Bank of Greece, at a time when the market is showing “mild” momentum.
As Euro2day.gr reported previously, the rising inflationary pressures facing the construction market are creating stifling conditions for infrastructure projects and housing development, even leading to the cancellation of projects.
The Bank of Greece’s Monetary Policy Report emphasizes that the war in the Middle East is now emerging as a decisive factor in economic developments and in the real estate market in particular, with implications for energy costs, transportation costs, and construction costs.
“Under the current circumstances, property values are expected to be increasingly determined not only by location and demand, but also by energy efficiency and operating costs.
Furthermore, especially in the residential market, given that the supply of new properties remains limited, further increases in construction costs are expected to slow the launch of new projects, keeping prices high and worsening housing affordability, particularly for low- and middle-income households,” the report states.
Market participants report 30% increases in construction materials since the start of the war in Iran to date, while data on specific products show even greater increases.
Mild market momentum
At the same time, demand for apartments remains high, though the market appears to have reached its limits.
“The moderate momentum recorded in the housing market in 2025 continued into the first months of 2026. Interest remains strong among both domestic and foreign investors, primarily for residential properties as well as high-end commercial properties,” notes the Bank of Greece.
In an effort to boost supply, the government has taken action, but further steps are needed to achieve faster results.
“The government, as part of its efforts to address the housing issue, has announced a series of measures to boost supply; however, their substantive impact will only become apparent over time. More immediate results could come from simplifying property transfer and development procedures, as well as from incentives to reintroduce idle properties into the market,” the report notes.
“The real estate market is expected to continue growing at a moderate pace, while investor interest is expected to focus more on construction quality, improving energy efficiency, and selecting locations with developed infrastructure, provided that geopolitical uncertainty subsides and the Greek economy maintains its projected growth rates,” concludes the Bank of Greece.