The question heard more and more often in the real estate market is simple: where have all the homes gone? Despite the rally in both sale and rental prices, the number of available properties for sale or lease is shrinking month by month. The answer lies in the data of the Bank of Greece’s Financial Stability Report, which shows that the market is drying up from within.

The Bank of Greece attributes the dramatic drop in supply to three main factors.

First, thousands of properties tied up in non-performing loans remain “parked” in the portfolios of banks and loan servicers and have not returned to the market. Although many of them are intended for auction, a large portion remains inactive for years until legal or technical procedures are completed.

Second, the investment-driven use of housing—through short-term rentals or foreign investment schemes—absorbs an ever-increasing share of available stock. Homes that just a few years ago were rented to families now operate as tourist properties, deepening the gap in long-term housing supply.

Third, the low rate of new housing construction is worsening the problem. In the first half of 2025, building activity fell by 14% in the number of permits, 24% in total area, and 17% in volume. The “freeze” caused by the Council of State’s decision on the New Building Code, combined with higher material and energy costs, has brought construction to historic lows.

The result is a market operating under artificial scarcity: prices are rising not because of higher demand, but because of insufficient supply. As the Bank of Greece notes, low availability stems from the withdrawal of properties securing non-performing loans destined for auction, as well as from the investment-driven exploitation of housing.

This trend is reflected in the Bank’s own data, which highlights a “house price risk for households.” Apartment prices rose 7.3% year-on-year in the second quarter of 2025, surpassing the 2008 record high. New apartments increased by 6.8% and old ones by 7.6%, with the index reaching 104.5 points. In Athens, prices rose 5.9%, and in Thessaloniki and other regions 8.8%.

Rents are following a similar trajectory: the rental price index climbed to 114.7 points, ten points higher than last year, approaching 2011 levels. The Bank of Greece estimates that the market shows no signs of fatigue, as demand—both domestic and foreign—remains strong while supply stays limited.

According to the report, this low supply is the result of investment exploitation of housing, the withdrawal of properties tied to bad loans, and the decade-long decline in construction, which has prevented normal replenishment of housing stock. In the first half of 2025, building permits dropped by 14%, total surface area by 24%, and volume by 17.7%.

The Bank of Greece warns, however, that the prolonged rise in prices combined with low supply could create conditions for cyclical systemic risks in the market. Nevertheless, it notes that there is no immediate risk for banks, as mortgage lending remains at low levels.

Real estate market professionals warn that unless part of the stock “stuck” in fund and servicer portfolios is released, the imbalance will worsen. As they put it:

“We’re not building new homes, we’re not selling the old ones, and the existing ones are held by Airbnb.”

At the same time, Greek households face the heaviest housing cost burden in Europe. According to the Bank of Greece, 35.5% of household income now goes to housing, while nearly one in three people spend over 40% of their income on it. With 29% of citizens exceeding this threshold, Greece ranks first in the European Union, seven points ahead of second-place Denmark, based on Eurostat data cited by the Bank of Greece.

The figures show that housing costs have become the greatest financial pressure on Greek households, as prices reach record highs and available homes on the market continue to dwindle.