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Housing bubble bursts in southern, central Athens; rents drop again

In the center of Athens, there was an annual drop of 4.7 percent, while in the fourth quarter of 2019, rents gave up 6.2 percent. Now, the average monthly rent is 9.44 euros/sq.m. versus 9.9 euros/sq.m. in the first quarter of last year. Respectively, in the southern suburbs, rents eased 1.1 percent, extending a 0.9 percent drop booked in the previous three-month period.

The cost of renting a home in central and southern Athens has started falling after moving higher in the last three years on the back of limited supply levels. However, at a national level, rents kept advancing in the first quarter of the year, climbing by an annual pace of 9.5 percent, compared with a 9 percent jump in the previous quarter, according to SPI (Spitogatos Property Index). In absolute numbers, the average monthly cost of renting in Greece stands at 7.37 euros/ sq.m., versus 6.73 euros/sq.m. a year earlier.

The same does not apply, however, to some of the capital's most popular areas, namely in southern and central Athens. In these two districts, rents dipped for a second straight quarter, in a sign of fatigue from sharp rises seen in previous years and, obviously, the reluctance of more and more tenants to agree to prices being demanded.

In the center of Athens, there was an annual drop of 4.7 percent, while in the fourth quarter of 2019, rents gave up 6.2 percent. Now, the average monthly rent is 9.44 euros/sq.m. versus 9.9 euros/sq.m. in the first quarter of last year. Respectively, in the southern suburbs, rents eased 1.1 percent, extending a 0.9 percent drop booked in the previous three-month period. The average monthly rent remains the most expensive in Attica at 10.6 euros/sq.m., versus 10.7 euros/sq.m. a year earlier. The drop, of course, is not significant but shows that the rental market has hit a ceiling.

According to real estate market executives, this downward trend is likely to pick up in the second quarter of this year, especially in these two areas amidst low interest from tenants and a lack of alternative options for homeowners, such as renting the apartment on Airbnb-type platforms. Bookings from foreign visitors have plunged and it is not clear when they might recover, which means that the short-term lease option has ceased to exist. Thus, many landlords will be forced to make some concessions to secure a tenant for their property.

In the rest of the country, a steady increase in rents in Thessaloniki stands out, though prices are relatively lower than those seen in Athens. Based on the relevant data, rents in central Thessaloniki advanced 8.8 percent to 7.64 euros/sq.m., But in the broader area, there was an increase of 34 percent to 3.83 euros /sq. m.

In regards to selling prices, SPI data shows a slowdown in increases, as nationwide selling prices gained 6 percent in the first quarter of the year, versus a gain of 6.5 percent in the fourth quarter. The trend remains upward, albeit at a slower pace than in previous months. Sales prices are also expected to be affected by the economic fallout from the coronavirus in the coming months, which have created a "numbness" in the real estate market.

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