## 1. Greece Housing Affordability Paradoxes

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---

### Introduction and framing
- Greece faces mounting and multifaceted housing affordability challenges despite seemingly favorable structural conditions.
- Paradoxes:
  - More than 60 percent of Greek households are outright owners (i.e., with no mortgages) but still face high housing cost burdens.
  - Greece has one of the highest dwelling stock per capita with declining population, yet 35 percent of these properties are not used as primary residence, of which one third (12-13 percent of total stock) is vacant.
- Policy priorities identified:
  - Mobilize underutilized housing stock by combining renovation programs with disincentives to vacancy.
  - Address bottlenecks: fragmented co-ownership, stranded assets related to legacy distressed debt, unresolved construction compliance issues.
  - Assess effectiveness of restrictions on short-term rentals (STRs) and reduce the risk premium associated with long-term rental (LTR) while improving price discovery.
  - Expand social and affordable housing via public-private partnerships and reduce regulatory uncertainty (zoning and building permits).
  - Facilitate labor and capital reallocation within construction and strengthen domestic workforce training to raise productivity and contain construction costs.

### House price, rent dynamics, and cost burdens
- House price dynamics and valuation:
  - Prices fell by more than 40 percent over 2008-16, then recovered steadily.
  - Cumulative price increase about 85 percent versus 47 percent for disposable income per capita.
  - Most of the price increase occurred after the pandemic (+61 percent since 2020Q4).
  - Overvaluation is estimated at around 10 percent.
  - Asking prices significantly higher in Attica, Thessaloniki and touristic hubs.
- Mortgage affordability and access:
  - Housing affordability index has deteriorated in recent years.
  - Under assumptions: debt service-to-income (DSTI) ratio of 30 percent and loan-to-value (LTV) ratio of 70 percent (respectively 80 percent), the median household would fall about 7 percent (respectively 17 percent) short of the income needed to qualify for a mortgage in 2024.
  - Assuming a saving rate of 10 percent per year, it would take roughly 24 years (respectively 14 years) to accumulate the required downpayment.
  - Access to mortgage credit further constrained by crisis legacy and conservative bank lending standards.
- Rent dynamics:
  - Rent component of HICP remains below pre-crisis levels but rent inflation accelerated post-pandemic, culminating at 10 percent in 2025.
  - Asking rents per square meter show stronger dynamics, with faster increases for new leases and regional heterogeneity (larger pressures in Thessaloniki and Athens).
- Housing cost burden and related indicators:
  - Median housing cost (including mortgages) exceeded a third of disposable income in 2025.
  - Approximately two out of five households are overburdened (i.e., they spend more than 40 percent of disposable income on housing-related expenditure).
  - An additional 20 percent of households spend 30-40 percent of disposable income on housing costs.
  - High arrears: 41.8 percent of households in arrears on their housing payments (EU-SILC survey).
  - Social impacts: young people stay longer with parents and households live in smaller houses, contributing to high overcrowding rates, particularly for renters.

### Micro perspective: who is most affected and why
- Tenure and income effects:
  - Tenure is a key determinant of overburden, conditional on income.
  - Relative to outright owners, households with a mortgage and renters face a significantly higher probability of overburden, with differences widening when interacted with income.
  - Being in the bottom 40 percent of the income distribution increases the probability of being overburdened by large margins.
  - Predicted probability examples:
    - Low-income mortgagors (renters) exceed 90 percent probability of being overburdened versus about one-third for higher-income households.
    - Low-income renters face four times larger probability of being overburdened than higher-income renters.
  - Even outright owners exhibit sharply higher probability of overburden when low-income.
- Other household characteristics:
  - Single-person and single-parent households exhibit higher probabilities of overburden.
  - Lower education and weaker labor market attachment associated with higher risk.
  - Regional dimension: renters in Attica and Central Macedonia (Thessaloniki) have higher probability of being overburdened.
- Compositional and behavioral shifts:
  - Joint distribution of income and wealth shifted over 2011-21 toward a greater share of households holding illiquid housing assets but with limited current income (asset-rich income-poor).
  - Rise in single-person and single-parent households (12 percentage points since 2011) reduces economies of scale and raises per-capita housing costs.
  - Result: outright ownership does not fully shield low-income households from affordability pressures.

### Recurring costs and energy inefficiency
- Housing stock characteristics and energy performance:
  - Stock is old and less energy efficient than similar countries, driving higher recurring costs (utilities, maintenance, property taxation).
  - Only 7.4 percent achieve an energy class of B or higher.
  - Greek dwellings consume roughly 65 percent more energy per square meter than Portuguese properties.
  - Investment in energy upgrades in Portugal was 2.5 times higher.
  - Recent reductions in ENFIA (unified property tax) occurred, but recurring property taxes remain relatively high; exemptions for some low-income households introduced.

### What drives market imbalances despite ample headline stock
- Rising and concentrated demand:
  - House purchase demand increased rapidly since 2017, driven mainly by investor demand and supportive policies.
  - External demand factors:
    - Foreign investors and Greek diaspora attracted by relatively low valuations and capital gains expectations.
    - Policy frameworks such as the Golden Visa program, tax incentives for pensioners, search-for-yield dynamics, and lower ENFIA tax since 2022 reduced the user cost of housing and supported inflows.
    - “Announcement effects” around Golden Visa eligibility thresholds may have temporarily accelerated opportunistic investment.
  - Domestic demand factors:
    - Resident demand shallow and dominated by high-income cash buyers; since 2023 demand shifted toward first-time buyers buoyed by MyHome I and MyHome II subsidized loan programs.
- Concentration in sub-markets:
  - Population decline over the last 15 years but household numbers continued to rise due to smaller household size.
  - Increased demand for smaller houses and post-crisis urbanization concentrated in metropolitan areas—particularly Attica where population density is 20 times higher than the rest of the country—amplifying local pressures.
- Underutilized and inefficiently allocated stock:
  - Effective housing stock lower than headline vacancy rates suggest.
  - Of the 35 percent of stock not used as primary residence, one third is vacant (12-13 percent of total stock); the rest are holiday or secondary homes.
  - More than half of unoccupied units were built before 1980; many are old, energy-inefficient, and possibly not readily habitable.
  - Constraints to bringing units to market include liquidity and financing constraints, high renovation costs, fragmented co-ownership structures, and high cost of remedying regulatory and legal irregularities.
  - A non-trivial number of units remain outside the market, including properties held by the public sector, banks, and credit servicers.

### Supply–demand mismatches and listing characteristics
- Market indicators and matching frictions:
  - Supply of properties for sale and rent has increased considerably according to Spitogatos listings.
  - Time-on-market: around 8 months (sale) and 6 months (rent), indicating search and matching frictions.
  - Alpha Bank survey (2025) identifies differences in location, size, and price segments as key impediments for prospective homebuyers.
- Price and size distribution of listings (2025):
  - 55 percent of listed properties for sale exceed EUR200K.
  - One third of listed properties for sale are above EUR280K.
  - Median rental listing is around EUR575 per month.
  - Median rental listing in Attica is about EUR785 per month.
  - About one third of listings for sale exceed 120m2.
  - Share of small rental dwellings (lower than 60 m2):
    - Attica and Thessaloniki: around 30 percent.
    - Other regions: 55 percent.

### Competition from Short-Term Rentals (STR)
- STR growth and stock shares (INSETE database, 2017–2024):
  - 240 percent increase from less than 100K to more than 230K listings.
  - STR listings represent about 3.5 percent of the housing stock.
  - STR listings represent 10 percent of the unoccupied stock (including holiday and secondary homes).
  - STR listings represent 29 percent of vacant properties.
- Spatial concentration: touristic Islands, central Athens, and Piraeus.
- Empirical findings:
  - Higher STR intensity is associated with higher asking prices, especially where owner occupancy rate is low.
  - Similar but smaller effects are found for rents, suggesting reduced availability of long-term rental (LTR) units in high-demand areas.
  - Impact on affordability also depends on STR impact on income and requires further analysis.

### Increasingly constrained new supply
- Construction sector recovery and constraints:
  - 2024 building permits exceeded 41,000 units—close to 2010 level—likely feeding the market in 2026.
  - Binding constraints:
    - Labor shortages, aging workforce, declining participation of younger workers.
    - Labor productivity remains below EU levels.
    - Sector fragmentation: over 96 percent of firms classified as micro-enterprises.
    - High share of workers employed by micro firms relative to peers.
    - Low capital formation historically insufficient to offset depreciation.
    - Financing constraints: higher borrowing costs and persistent SME financing gaps relative to the euro area (IOBE, 2025).

### Policy actions undertaken
- Government comprehensive housing package:
  - More than 40 measures with a budget exceeding €6.5 billion.
  - Objectives: easing price pressures, expanding supply, improving access to affordable and quality housing, especially for younger and vulnerable households.
  - Governance reforms: interministerial coordination framework and a National Housing Strategy.
- Demand-side measures:
  - Subsidized mortgage schemes for first-time buyers (My Home I & II).
  - Rent refunds and targeted housing allowances for students, low-income households, and uninsured elderly.
  - Tax measures including reductions in ENFIA and suspension of VAT on new construction.
  - Tightening regulatory framework for the Golden Visa program (higher investment thresholds and usage restrictions).
- Supply-side measures:
  - Mobilizing idle housing stock and incentivizing reallocation to LTR.
  - Renovation programs: “Upgrade My Home,” “Save 2025,” and “Renovate–Rent.”
  - Construction of social housing and student dormitories.
  - Use of public land and vacant military camps through social exchange schemes retaining a share of units in public ownership at below-market rents.
  - Geographically targeted STR restrictions and tax relief for long-term leasing.

### Policy advice and recommended measures
- Advice 1: Mobilizing vacant properties
  - Combine incentives, disincentives, and institutional support.
  - Recommended measures:
    - Expanded, well-targeted renovation support, conditioned on energy efficiency upgrades.
    - Fiscal disincentives for vacancy (vacancy taxes or surcharges) with calibration elements:
      - Target geographically to tight markets.
      - Graduated rates increasing with duration of vacancy.
      - Clear and limited exemptions (e.g., renovation in progress, legal disputes).
      - Robust property registries and enforcement mechanisms, complemented with utility usage data.
    - Tackle fragmented co-ownership and legal gridlock:
      - Ongoing inheritance law reform ending forced co-ownership and simplifying transfer procedures.
      - Enable majority-based decision-making among co-owners, targeted incentives for consolidation (e.g., tax relief for buyouts), and accelerate judicial processes and dispute resolution.
- Advice 2: Enhancing attractiveness of long-term leases (LTR)
  - Address landlord preferences for STR (higher returns, flexibility, lower perceived tenant risk).
  - Measures:
    - Tax incentives for switching from STR/vacancy to LTR.
    - Reducing information asymmetry for landlords (tenant registry).
    - Enforcing regulation and data transparency for STR.
    - Reducing minimum rental contract duration (currently three years).
    - Faster dispute resolution processes.
    - Rent guarantee schemes to shield low-income renters where social rental housing is unavailable.
  - Caution:
    - Two thirds of vacant properties are secondary/holiday homes used part of the year—LTR and STR are not perfect substitutes.
    - STR effects on affordability are ambiguous due to tourism-related income effects.
    - Geographically targeted restrictions can shift activity to neighborhood markets.
- Advice 3: Increasing elasticity of new supply and containing construction cost growth
  - Raise construction sector productivity via resource reallocation and stronger firm dynamics:
    - Facilitate exit/restructuring of nonviable (“zombie”) firms.
    - Reduce barriers to firm growth and consolidation.
    - Strengthen access to financing for small and medium-sized developers.
    - Promote innovation and capital deepening (digital tools, modular construction).
    - Improve competition and reduce distortions that fragment the sector.
  - Address labor shortages:
    - Targeted training and reskilling programs aligned with sector needs.
    - Incentives to attract younger workers and improve labor mobility.
    - Facilitate reallocation of labor toward construction from lower-productivity sectors.
    - Improve working conditions and formalization.
  - Improve spatial planning and reduce regulatory uncertainty:
    - Optimize spatial planning in high-demand areas and integrate with regional development strategies.
    - Improve completeness and accessibility of land and cadastral registries.
- Advice 4: Boosting supply of affordable and social housing
  - Reinforce authorities’ efforts:
    - Rehabilitation of publicly-owned properties in partnership with private sector to develop social rental housing.
    - New building regulation incentivizing developers to allocate part of new construction to social and affordable housing.
    - Efficient allocation of these properties to those who need them most is critical.
    - Extend student dormitories and complement with measures to promote co-living given prevalence of large properties.
- Advice 5: Recalibrating demand measures to reduce price capitalization
  - Better target and calibrate demand-side support to avoid price capitalization and regressive effects.
  - Recommendations:
    - Index rent refund on the monthly payment to enhance rental market transparency (noting higher future fiscal cost).
    - Refine eligibility criteria and means-testing to improve cost-effectiveness.
    - Assess the impact of tax incentives (e.g., VAT exemption on new construction); consider phasing out or reorienting toward renovation if benefits accrue disproportionately to richer households or real estate companies.
- Advice 6: Strengthening policy coordination
  - Coordinate across labor, financial, energy, and regional policies to address structural drivers of income, costs, and demand concentration.
  - Key complementarities:
    - Labor market measures to increase participation and boost productivity and wages.
    - Easing credit constraints: accelerate resolution of legacy debt, promote greater banking competition, and encourage tailored financing for housing renovation.
    - Lowering energy costs through expanded renewable energy and improved interconnections, particularly for island regions.

### Conclusions
- Main conclusions:
  - Housing affordability is at the center of a self-reinforcing loop between households’ vulnerability, aging housing stock, and societal/demographic dynamics changes.
  - Greece faces a housing allocation problem rather than a standard housing shortage; structural challenges impede efficient use of existing stock.
  - Spatial distribution, segmented demand, and market inefficiencies exacerbate supply–demand mismatches.
  - Government measures are broadly directionally appropriate but need consolidation, greater focus on affordable supply, and a mix of sticks and carrots to mobilize existing stock and reduce mismatches.
  - Alleviating construction sector capacity constraints and boosting productivity is key to unlocking supply and containing construction cost increases.
  - Ongoing digitalization and centralization of property information will help better identify problems and design adequate policies.
  - Housing policies should exploit synergies with other policies.

*Prepared by Tarak Jardak and Summer (Yutian) Cai; April 30, 2026.*

### 1. Greece Housing Affordability Paradoxes _____________________________________________ 3

### 1. Greece Housing Affordability Paradoxes

### Introduction and framing
- Greece faces mounting and multifaceted housing affordability challenges despite seemingly favorable structural conditions.
- Paradoxes highlighted:
  - More than 60 percent of Greek households are outright owners (i.e., with no mortgages) but still face high housing cost burdens.
  - Greece has one of the highest dwelling stock per capita with declining population, yet 35 percent of these properties are not used as primary residence, of which one third (12-13 percent of total stock) is vacant.
- Policy priorities identified:
  - Mobilize underutilized housing stock by combining renovation programs with disincentives to vacancy.
  - Address bottlenecks: fragmented co-ownership, stranded assets related to legacy distressed debt, unresolved construction compliance issues.
  - Assess effectiveness of restrictions on short-term rentals (STRs) and reduce the risk premium associated with long-term rental (LTR) while improving price discovery.
  - Expand social and affordable housing via public-private partnerships and reduce regulatory uncertainty (zoning and building permits).
  - Facilitate labor and capital reallocation within construction and strengthen domestic workforce training to raise productivity and contain construction costs.

### How severe are housing affordability challenges? (House price and rent dynamics; cost burdens)
- House price dynamics and valuation:
  - Prices fell by more than 40 percent over 2008-16, then recovered steadily.
  - Cumulative price increase about 85 percent versus 47 percent for disposable income per capita.
  - Most of the price increase occurred after the pandemic (+61 percent since 2020Q4).
  - Overvaluation is estimated at around 10 percent.
  - Geographical heterogeneity: asking prices significantly higher in Attica, Thessaloniki and touristic hubs.
- Mortgage affordability and access:
  - Housing affordability index has deteriorated in recent years.
  - Under assumptions: debt service-to-income (DSTI) ratio of 30 percent and loan-to-value (LTV) ratio of 70 percent (respectively 80 percent), the median household would fall about 7 percent (respectively 17 percent) short of the income needed to qualify for a mortgage in 2024.
  - Assuming a saving rate of 10 percent per year, it would take roughly 24 years (respectively 14 years) to accumulate the required downpayment.
  - Access to mortgage credit further constrained by crisis legacy and conservative bank lending standards.
- Rent dynamics:
  - Rent component of HICP remains below pre-crisis levels but rent inflation accelerated post-pandemic, culminating at 10 percent in 2025.
  - Asking rents per square meter show stronger dynamics, with faster increases for new leases and regional heterogeneity (larger pressures in Thessaloniki and Athens).
- Housing cost burden and related indicators:
  - Median housing cost (including mortgages) exceeded a third of disposable income in 2025.
  - Approximately two out of five households are overburdened (i.e., they spend more than 40 percent of disposable income on housing-related expenditure).
  - An additional 20 percent of households spend 30-40 percent of disposable income on housing costs.
  - High arrears: 41.8 percent of households in arrears on their housing payments (EU-SILC survey).
  - Other social impacts: young people stay longer with parents and households live in smaller houses, contributing to high overcrowding rates, particularly for renters.

### Micro perspective: Who is most affected and why?
- Income capacity and tenure effects:
  - Tenure is a key determinant of overburden, conditional on income.
  - Relative to outright owners, households with a mortgage and renters face a significantly higher probability of overburden, with differences widening when interacted with income.
  - Being in the bottom 40 percent of the income distribution increases the probability of being overburdened by large margins.
  - Predicted probability examples:
    - Low-income mortgagors (renters) exceed 90 percent probability of being overburdened versus about one-third for higher-income households.
    - Low-income renters face four times larger probability of being overburdened than higher-income renters.
  - Even outright owners exhibit sharply higher probability of overburden when low-income.
- Other household characteristics:
  - Single-person and single-parent households exhibit higher probabilities of overburden.
  - Lower education and weaker labor market attachment associated with higher risk.
  - Regional dimension: renters in Attica and Central Macedonia (Thessaloniki) have higher probability of being overburdened.
- Compositional and behavioral shifts:
  - Joint distribution of income and wealth shifted over 2011-21 toward a greater share of households holding illiquid housing assets but with limited current income (asset-rich income-poor).
  - Rise in single-person and single-parent households (12 percentage points since 2011) reduces economies of scale and raises per-capita housing costs.
  - Result: outright ownership does not fully shield low-income households from affordability pressures.

### Recurring costs and energy inefficiency
- Greek housing stock characteristics:
  - Stock is old and less energy efficient than similar countries, driving higher recurring costs (utilities, maintenance, property taxation).
  - Only 7.4 percent achieve an energy class of B or higher.
  - Greek dwellings consume roughly 65 percent more energy per square meter than Portuguese properties.
  - Investment in energy upgrades in Portugal was 2.5 times higher.
  - Recent reductions in ENFIA (unified property tax) occurred, but recurring property taxes remain relatively high; exemptions for some low-income households introduced.

### What drives market imbalances despite ample headline stock?
- Rising and concentrated demand:
  - House purchase demand increased rapidly since 2017, driven mainly by investor demand and supportive policies.
  - External demand factors:
    - Foreign investors and Greek diaspora attracted by relatively low valuations and capital gains expectations.
    - Policy frameworks such as the Golden Visa program, tax incentives for pensioners, search-for-yield dynamics, and lower ENFIA tax since 2022 reduced the user cost of housing and supported inflows.
    - “Announcement effects” around Golden Visa eligibility thresholds may have temporarily accelerated opportunistic investment.
  - Domestic demand factors:
    - Resident demand shallow and dominated by high-income cash buyers; since 2023 demand shifted toward first-time buyers buoyed by MyHome I and MyHome II subsidized loan programs.
- Concentration in sub-markets:
  - Population decline over the last 15 years but household numbers continued to rise due to smaller household size.
  - Increased demand for smaller houses and post-crisis urbanization concentrated in metropolitan areas—particularly Attica where population density is 20 times higher than the rest of the country—amplifying local pressures.
- Underutilized and inefficiently allocated stock:
  - Effective housing stock lower than headline vacancy rates suggest.
  - Of the 35 percent of stock not used as primary residence, one third is vacant (12-13 percent of total stock); the rest are holiday or secondary homes.
  - More than half of unoccupied units were built before 1980; many are old, energy-inefficient, and possibly not readily habitable.
  - Constraints to bringing units to market include liquidity and financing constraints, high renovation costs, fragmented co-ownership structures, and high cost of remedying regulatory and legal irregularities.
  - A non-trivial number of units remain outside the market, including properties held by the public sector, banks, and credit servicers.

### Policy implications and recommended measures (as identified in the paper)
- Mobilize idle stock:
  - Combine renovation programs with disincentives to vacancy.
  - Address fragmented co-ownership, legacy distressed debt (stranded assets), and construction compliance issues.
- Short-term rentals and foreign demand:
  - Assess effectiveness of restrictions on short-term rentals.
  - Reduce risk premium associated with long-term rentals and improve price discovery.
- Supply expansion and affordability:
  - Expand social and affordable housing through close public-private partnerships.
  - Reduce regulatory uncertainty and streamline zoning and building permit processes.
- Construction sector and costs:
  - Facilitate labor and capital reallocation within the construction sector.
  - Strengthen domestic workforce training to raise productivity, ease labor shortages, and contain construction costs.

*Prepared by Tarak Jardak and Summer (Yutian) Cai; April 30, 2026.*

### 16.      Evidence also points to significant mismatches between supply and demand. Data

### 16.      Evidence also points to significant mismatches between supply and demand. Data

### Supply–demand mismatches and listing characteristics
- Supply of properties for sale and rent has increased considerably according to Spitogatos listings.
- Time-on-market is relatively high: around 8 months (sale) and 6 months (rent), indicating search and matching frictions.
- Alpha Bank survey (2025) identifies differences in location, size, and price segments as key impediments for prospective homebuyers.
- Price and size distribution of listings (2025):
  - 55 percent of listed properties for sale exceed EUR200K.
  - One third of listed properties for sale are above EUR280K.
  - Median rental listing is around EUR575 per month.
  - Median rental listing in Attica is about EUR785 per month.
  - About one third of listings for sale exceed 120m2.
  - Share of small rental dwellings (lower than 60 m2):
    - Attica and Thessaloniki: around 30 percent.
    - Other regions: 55 percent.

### Explanation 3: Competition from Short-Term Rental (STR)
- STR growth (INSETE database, 2017–2024):
  - 240 percent increase from less than 100K to more than 230K listings.
  - STR listings represent about 3.5 percent of the housing stock.
  - STR listings represent 10 percent of the unoccupied stock (including holiday and secondary homes).
  - STR listings represent 29 percent of vacant properties.
- Spatial concentration: touristic Islands, central Athens, and Piraeus.
- Empirical findings from regional database (Spitogatos, INSETE, ELSTAT):
  - Higher STR intensity is associated with higher asking prices, especially where owner occupancy rate is low.
  - Similar but smaller effects are found for rents, suggesting reduced availability of long-term rental (LTR) units in high-demand areas.
  - Impact on affordability also depends on STR impact on income and requires further analysis.

### Explanation 4: Increasingly constrained new supply
- Construction sector recovery and capacity:
  - 2024 building permits exceeded 41,000 units—close to 2010 level—likely feeding the market in 2026.
- Binding constraints:
  - Labor shortages, aging workforce, declining participation of younger workers.
  - Labor productivity remains below EU levels.
  - Sector fragmentation: over 96 percent of firms classified as micro-enterprises.
  - High share of workers employed by micro firms relative to peers.
  - Low capital formation historically insufficient to offset depreciation.
  - Financing constraints: higher borrowing costs and persistent SME financing gaps relative to the euro area (IOBE, 2025).

### What has been done (policy actions)
- Government comprehensive housing package:
  - More than 40 measures with a budget exceeding €6.5 billion.
  - Objectives: easing price pressures, expanding supply, improving access to affordable and quality housing, especially for younger and vulnerable households.
  - Governance reforms: interministerial coordination framework and a National Housing Strategy.
- Demand-side measures:
  - Subsidized mortgage schemes for first-time buyers (My Home I & II).
  - Rent refunds and targeted housing allowances for students, low-income households, and uninsured elderly.
  - Tax measures including reductions in ENFIA and suspension of VAT on new construction.
  - Tightening regulatory framework for the Golden Visa program (higher investment thresholds and usage restrictions).
- Supply-side measures:
  - Mobilizing idle housing stock and incentivizing reallocation to LTR.
  - Renovation programs: “Upgrade My Home,” “Save 2025,” and “Renovate–Rent.”
  - Construction of social housing and student dormitories.
  - Use of public land and vacant military camps through social exchange schemes retaining a share of units in public ownership at below-market rents.
  - Geographically targeted STR restrictions and tax relief for long-term leasing.

### Advice 1: Mobilizing vacant properties
- Policy mix should combine incentives, disincentives, and institutional support.
- Recommended measures:
  - Expanded, well-targeted renovation support, conditioned on energy efficiency upgrades.
  - Fiscal disincentives for vacancy (vacancy taxes or surcharges) with key calibration elements:
    - Target geographically to tight markets.
    - Graduated rates increasing with duration of vacancy.
    - Clear and limited exemptions (e.g., renovation in progress, legal disputes).
    - Robust property registries and enforcement mechanisms, complemented with utility usage data.
  - Tackle fragmented co-ownership and legal gridlock:
    - Ongoing inheritance law reform ending forced co-ownership and simplifying transfer procedures.
    - Strengthen impact by enabling majority-based decision-making among co-owners, targeted incentives for consolidation (e.g., tax relief for buyouts), and accelerating judicial processes and dispute resolution.

### Advice 2: Enhancing attractiveness of long-term leases (LTR)
- Address landlord preferences for STR (higher returns, flexibility, lower perceived tenant risk).
- Supportive measures already in place or recommended:
  - Tax incentives for switching from STR/vacancy to LTR.
  - Reducing information asymmetry for landlords (tenant registry).
  - Enforcing regulation and data transparency for STR.
  - Reducing minimum rental contract duration (currently three years).
  - Faster dispute resolution processes.
  - Rent guarantee schemes to shield low-income renters where social rental housing is unavailable.
- Caution: systematically assess effectiveness and cost–benefit of STR restrictions because:
  - Two thirds of vacant properties are secondary/holiday homes used part of the year—LTR and STR are not perfect substitutes.
  - STR effects on affordability are ambiguous due to tourism-related income effects.
  - Geographically targeted restrictions can shift activity to neighborhood markets (evidence from Karamanis et al., 2026).

### Advice 3: Increasing elasticity of new supply and containing construction cost growth
- Raise construction sector productivity via resource reallocation and stronger firm dynamics:
  - Facilitate exit/restructuring of nonviable (“zombie”) firms.
  - Reduce barriers to firm growth and consolidation.
  - Strengthen access to financing for small and medium-sized developers.
  - Promote innovation and capital deepening (digital tools, modular construction).
  - Improve competition and reduce distortions that fragment the sector.
- Address labor shortages:
  - Targeted training and reskilling programs aligned with sector needs.
  - Incentives to attract younger workers and improve labor mobility.
  - Facilitate reallocation of labor toward construction from lower-productivity sectors.
  - Improve working conditions and formalization.
- Improve spatial planning and reduce regulatory uncertainty:
  - Optimize spatial planning in high-demand areas and integrate with regional development strategies.
  - Improve completeness and accessibility of land and cadastral registries.

### Advice 4: Boosting supply of affordable and social housing
- Reinforce authorities’ efforts:
  - Rehabilitation of publicly-owned properties in partnership with private sector to develop social rental housing.
  - New building regulation incentivizing developers to allocate part of new construction to social and affordable housing.
  - Efficient allocation of these properties to those who need them most is critical.
  - Extend student dormitories and complement with measures to promote co-living given prevalence of large properties.

### Advice 5: Recalibrating demand measures to reduce price capitalization
- Better target and calibrate demand-side support to avoid price capitalization and regressive effects.
- Recommendations:
  - Index rent refund on the monthly payment to enhance rental market transparency (noting higher future fiscal cost).
  - Refine eligibility criteria and means-testing to improve cost-effectiveness.
  - Assess the impact of tax incentives (e.g., VAT exemption on new construction); consider phasing out or reorienting toward renovation if benefits accrue disproportionately to richer households or real estate companies.

### Advice 6: Strengthening policy coordination
- Coordinate across labor, financial, energy, and regional policies to address structural drivers of income, costs, and demand concentration.
- Key complementarities:
  - Labor market measures to increase participation and boost productivity and wages.
  - Easing credit constraints: accelerate resolution of legacy debt, promote greater banking competition, and encourage tailored financing for housing renovation.
  - Lowering energy costs through expanded renewable energy and improved interconnections, particularly for island regions.

### Conclusions
- Main conclusions:
  - Housing affordability is at the center of a self-reinforcing loop between households’ vulnerability, aging housing stock, and societal/demographic dynamics changes.
  - Greece faces a housing allocation problem rather than a standard housing shortage; structural challenges impede efficient use of existing stock.
  - Spatial distribution, segmented demand, and market inefficiencies exacerbate supply–demand mismatches.
  - Government measures are broadly directionally appropriate but need consolidation, greater focus on affordable supply, and a mix of sticks and carrots to mobilize existing stock and reduce mismatches.
  - Alleviating construction sector capacity constraints and boosting productivity is key to unlocking supply and containing construction cost increases.
  - Ongoing digitalization and centralization of property information will help better identify problems and design adequate policies.
  - Housing policies should exploit synergies with other policies.

*Source: sipea2026066*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026066.pdf_