Hello,
We are in the final stretch of 2024, and in a month we will be able to know what happened to real estate prices over the past year and generally begin to sum up 2024.
Since the discussions on the 2025 state budget are still proceeding at a sluggish pace, it is not yet known whether the temporary provision imposing an 8% purchase tax on investors and second-apartment buyers will be extended, or what will happen to VAT. Leaving the tax at its current level will, presumably, affect the continuation of Israeli investments abroad.
This month we would like to bring to your attention:
A. Apartment prices in Greece continue to rise.
B. The results of the residents' referendum in Bucharest.
C. The turmoil around the results of the presidential elections in Romania.
D. The reasons for the rise in apartment prices in Bulgaria.
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
The real estate market in the 3rd quarter continued to be dynamic
The Greek website Spitogatos, which serves as the country's largest classifieds site and regularly monitors real estate prices, published its real estate review for the 3rd quarter of 2024 and summarized: the Greek real estate market continues to appear dynamic, characterized by rising prices in various sectors. In this quarter, increased interest in student housing, combined with the traditionally strong summer season, significantly affected both rental and sale.
According to the report, the average asking sale price of residential real estate in Greece rose by 6.8% compared with the corresponding period in 2023. In addition, there was a 7.6% rise in average asking rents, which indicates considerable interest in both rental and purchase options.
The southern and northern suburbs of Athens and the Cycladic islands remained the most coveted places for property buyers, with the highest purchase prices in the country. Other areas worthy of note include: Lefkada and Piraeus.
Looking at the rental market, the southern suburbs of Athens and the Cycladic islands top the list of the highest rents, alongside central Athens and Piraeus. It should be noted that Halkidiki also saw a rise in rents, driven by demand for short-term rental in this picturesque area.
One of the most significant changes in this quarter was in Piraeus, which experienced an impressive rise of 27.8% in residential sale prices compared with the third quarter of 2023. In the rental market, the outskirts of Thessaloniki recorded the largest jump, with rents jumping by 20%, highlighting the growing demand for housing options outside the large urban centers.
The most expensive areas in Athens in terms of asking sale prices are: Vouliagmeni, Voula, Glyfada, Kolonaki-Lykavittos and Papagou
The most expensive areas in Athens in terms of asking rents are: Vouliagmeni, Kolonaki-Lykavittos, Glyfada, Palaio Psychiko, Voula
Romania
The residents' referendum in Bucharest - what will be the future of construction in the city
As part of the vote in the first round of the Romanian presidential election held on 24/11, Bucharest residents were asked to decide on several questions, among them: “Do you agree that the General Mayor of Bucharest should issue building permits for the entire administrative territory of the city?”, as part of the struggle of the mayor of Bucharest, Nicușor Dan, against real estate developers, as he seeks to strip the sector city halls of their authority to issue building permits.
A minimum of 30% of voters had to take part in the referendum for it to be valid. About 41% voted, thus approving the referendum as a big victory for the mayor, with 64.39% supporting his proposal regarding the issuing of building permits.
After a 5-year term of legal battles against real estate developers and a freeze on issuing new building permits, his election in the summer to another term and the results of the residents' referendum leave many developers with many question marks.
Elections in Romania
Turmoil in the presidential elections, the right strengthened in the parliamentary elections
The results of the first round of the Romanian presidential election were a surprise: contrary to expectations in the preliminary polls and the TV networks' exit polls, the largest number of votes went to the independent candidate Călin Georgescu with 22.94% of the votes, followed by the candidate of the USR party (a center-right party founded in 2018), Elena-Valerica Lasconi, and the incumbent Prime Minister, Ion-Marcel Ciolacu of the Social Democratic Party, in a close race with a minimal vote gap between them after 99.3% of the votes were counted.
Right on the eve of the second round of the presidential election, the Constitutional Court of Romania decided to annul the results of the first round of Romania's presidential election, and the second round, which was due to be held yesterday, Sunday (8/12) this week, was canceled.
The decision was made in light of claims of Russian interference in the first round, after Georgescu, an independent pro-Russian candidate whose campaign was based entirely on TikTok videos, came in first place.
The elections for the Romanian Parliament were held on Sunday (1/12), with surprising results:
The Social Democratic Party (PSD), which formed the outgoing government, received 21.96% of the votes, followed by the far-right AUR party with 18%, the National Liberal Party (PNL) received 13.2%, and the reformist Save Romania Union (USR) received 12.4%.
The far-right party SOS Romania received 7.36% of the votes, and POT (Party of Young People) 6.46% of the votes, and closing the list is the Hungarian minority party (UDMR) with 6.34%.
The results confirm that the traditional pro-Western parties managed to retain control of Parliament even though the far-right movement increased its strength to 25% of the total votes.
In the days that have passed, Romania's main centrist parties, namely the Social Democratic Party (PSD), the National Liberal Party (PNL), the reformist Save Romania Union (USR), and the ethnic Hungarian minority party, UDMR, are supposed to form a pro-European coalition with a majority in Parliament. The agreement leaves out the far-right parties, which rose to about 33% in the latest parliamentary elections, and paves the way for a new government.
From the writer's desk:
The turmoil and uncertainty regarding the presidential elections and the results of the parliamentary elections all convey political instability and may affect the Romanian economy in the short term.
The combination of the temporary political instability together with the results of the residents' referendum in Bucharest may create problems for real estate developers. It is important to remember that the Bucharest mayor's struggle against real estate developers, which has lasted about 5 years, and the freeze on issuing building permits for new projects, caused a decline in construction starts in Bucharest and a rise in prices, as well as an exit of both developers and buyers to projects outside the city.
Cyprus
Insights from the KPMG report on the Cyprus real estate market
According to the 13th edition of the “KPMG Cyprus Real Estate Market Insights”, the backlog of real estate projects in Cyprus continues to expand in 2024, with residential construction leading the field.
The report notes that in the first half of 2024 there was a 32.5% increase in building permits issued relative to the corresponding period in 2023; 34% of the building permits were issued in Nicosia, 27% in Limassol and 19% in Larnaca. 81% of all the building permits issued are for residential projects.
In 2023 Limassol led with 33% of the 15,567 sale agreements reported, followed by Paphos with 22% and Larnaca with 20%. 56% of buyers in 2023 were Cypriots and the rest foreign investors, while in the first 10 months of 2024 there were 7,814 purchases by Cypriots, accounting for 60% of total purchases, and 5,138 purchases by foreign investors; in this period, despite the decline in purchases by foreigners, a small increase in purchases by foreigners was measured in Larnaca.
Rents rose in all cities in the 3rd quarter of 2024 compared with the corresponding quarter in 2023 (except in the apartment segment in Limassol, where an average decline of 6.3% was recorded).
Bulgaria
Credit activity and rising incomes push up housing prices in Bulgaria
In the second quarter of the year, Bulgaria's housing price index rose by 15.1% compared with the corresponding quarter in 2023, slightly lower than the 16% rise in the first quarter. Prices rose for both new homes and existing (second-hand) properties, with new homes rising by 15.6% and the second-hand market by 14.8%. This trend was also evident in the six large regional cities, where a marked acceleration in price rises was observed in Ruse, Burgas and Stara Zagora. These findings are detailed in the quarterly publication of the Bulgarian National Bank, Economic Review.
Several factors contribute to the rise in apartment prices. A rise in household incomes, strong lending activity and historically low annual interest rates on loans for new apartments were significant drivers. In addition, the limited options for investing in savings, given the negative real interest rate on deposits, also push more people into the housing market. The volume of completed sale transactions also jumped, rising by 26.2% compared with the previous quarter, alongside an annual rise in the cost of constructing new buildings.
However, despite these positive factors, there is some indication of a limit to how much housing prices can keep growing. A weakening of households' enthusiasm for buying new homes has been observed, which may moderate price rises. The price-to-rent ratio of an apartment, a common indicator of housing overvaluation or undervaluation, remained 43% above the long-term average. This indicates that households are buying apartments for reasons beyond immediate financial returns, such as expecting future capital gains (appreciation) or viewing housing as a stable store of value against the backdrop of a negative real interest rate.
For the attention of real estate investors abroad: where the price is at a peak and where there is room for rises
The article gathers reviews by economic bodies of the housing markets in Greece, Portugal and Cyprus. In Greece, according to the central bank, apartment prices have risen by about 50% in the last seven years, and the International Monetary Fund noted in a report from the beginning of the year that the market has entered “bubble territory”, among other reasons because of demand by non-residents under the golden visa. In Portugal, the rating agency Morningstar DBRS found a 60% rise in housing prices between the end of 2018 and the third quarter of 2023, the highest among the 18 countries it examined, but in its assessment these are peak prices and not a bubble. In Cyprus, according to the central bank, prices rose by about 14% in the year to the first quarter of 2024, various indicators point to a slowdown, and about 40% of buyers are non-residents.
Source: Globes, Arik Mirovsky, 19.11.24
The American real estate market is stabilizing: home prices are climbing, but more slowly
According to a report by the National Association of Realtors in the USA, in the third quarter price rises were recorded in 87% of metropolitan areas, but only in 7% of the markets was the rise double-digit, and in about 13% of them prices fell. The median price of an existing home rose by 3.1% compared with the previous year and reached 418,700 dollars. The average monthly mortgage payment fell by 2.4% to 2,137 dollars, and the association's chief economist assessed that the risk of a market collapse is low, among other reasons because the rate of foreclosures and mortgage insolvencies is at a historic low.
Source: Calcalist, 13.11.24
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית