The Greek housing market has recorded one of the most significant recoveries in Europe after the crisis, with apartment prices now having exceeded their pre-crisis level and standing about 85% higher than the 2017 low.
According to Morningstar DBRS, the rise in prices is mainly due to the economic recovery, foreign investment, and persistent constraints in housing supply, rather than excessive growth in household borrowing, as was the case before the financial crisis.
This development supports the asset quality of Greek banks, as higher property values strengthen collateral, while improved household balance sheets and more conservative lending criteria limit risks.
“The recovery of the housing market supports banks’ credit fundamentals through stronger collateral values, greater household resilience, and more disciplined lending practices,” said Andrea Costanzo, Vice President at Morningstar DBRS.
However, housing affordability is the main medium-term risk. Morningstar DBRS estimates that, despite the deterioration in households’ ability to acquire housing, current conditions do not create systemic vulnerability for the banking sector.