Greece: Selected Issues

This Selected Issues paper explores Greece’s housing affordability paradoxes. Greece faces growing affordability challenges. House prices and have outpaced income gains, reflecting strong and increasingly concentrated demand, including from foreigners, alongside structural supply rigidities and supply-demand mismatches. Affordability pressures are compounded by high recurring costs, especially utility bills, due to old and energy inefficient stock and limited energy upgrades. Policy priority should be given to mobilizing the underutilized housing stock by combining renovation programs with disincentives to vacancy and by addressing bottlenecks such as fragmented co-ownership, stranded assets related to legacy distressed debt, and unresolved construction compliance issues. The authorities should assess the effectiveness of restrictions on short-term rentals and take measures to reduce the risk premium associated with long-term rental while improving price discovery. Expanding the supply of social and affordable housing requires close public-private partnerships while reducing regulatory uncertainty and streamlining potential zoning and building permits regulations. Facilitating labor and capital reallocation within the construction sector and strengthening domestic workforce training would help raise productivity, ease labor shortages and contain construction costs.