Chania Residential Property Market Outlook - Summer 2021
Covid-19 has created countless uncertainties regarding the return of investment potential, project budget and schedule for large and very large developments. Despite this, we remain generally optimistic on the real estate and construction sector outlook for the scope of this report and beyond.
According to our analysis, Chania residential property market has been improved but remaining economic uncertainty may temper some of our predictions and forecasts
The forecasts for seasonally adjusted residential property prices and pending sale contracts are more optimistic than our previous estimates because residential property sales and selling prices have stayed strong through the spring, amid progressively short inventory and high demand.
Our Big Data Analytics forecast (RESTful) believes that residential property prices in Chania would have risen more than 9.0 percent by June 2022.
Our models also predict that annual residential property value growth will rise to 4.8 – 8.5 percent from its current levels (June 2020) and that residential property sales volume will remain elevated in the coming year.
The present growth in residential property prices is similar to the rise in prices that preceded the 2008 recession. Despite the similarities, the conditions that led to both cases of historic residential property value growth are quite different.
Data from our analysis shows that the median list price of residential properties in the Prefecture of Chania grew approximately 1.0 percent from last year and reached €240.000 in June 2021 for a two-bedroom apartment.
The median listing price of €240.000 is a new all-time high. Residential property sales prices in the second largest city of Crete, grew an average of 2.4 percent compared to last year.
According to the Chania Town Planning Office, there are currently (July 2020) 500 building permissions in line for issuance, the most since 2008.
Moreover, during Q1, and Q2 builders’ and constructors’ confidence increased significantly, despite the unprecedented uncertainty as the evolution of the Covid-19 pandemic weighs heavily on the economic outlook of the country. Builders in Crete (not only in Chania) will need to build more single-family homes to meet long-term demand.
We also realized that some buyers and investors are moving away from the high-priced properties of Chania Old Town and City Center and searching for quality properties (and buildable plots) in other areas like Akrotiri, Galatas and Souda where residential property prices are still low.
1. Stick to your initial budget. Currently, you would need to raise your budget a bit higher to win the deal if you are interested in buying your dream home in Chania, Crete. At the same time, having a reliable, yet stable idea on how high a price you’re willing to pay for a property that you just discovered, will help you to keep overwhelming emotions inside and make your goals achievable.
2. Always conduct a property inspection. In 2020’s frenzy, some buyers were dissatisfied and unhappy because they bought without due diligence. When a particular property needs renovation works and when you are not sure about the asking price it’s a wise decision to procced to a professional inspection.
You need to have a holistic view about the property itself but also about the local trends and market conditions. However, make sure you conduct proper due diligence and not just a piece of paper before signing on the dotted line.
What a difference a pandemic like Covid-19 makes on the residential market of Crete, which advances in the opposite direction of what one would expect in a recession like the one we experienced here in Crete, Greece between 2008-2018?
More residential properties were sold in Crete during 2019 than in any year since 2012. An improving economy, a much more attractive investment framework and the strategic decision to reduce exposure to risk by investing in various assets across different sectors, industries, or even countries are fueling a residential housing boom.
Almost sixteen months since the start of the pandemic and the residential property market in Crete continues to show resilience. Double-digit home appreciation, low mortgage rates, and the growth of the economic confidence index are things that could not have been forecast last summer.
In 2020, low mortgage rates, combined with an increase in working from home as a result of the pandemic, have spurred a surge in housing demand, particularly in the cities of Chania, Rethymnon and Heraklion. Moreover, short-term rental platforms like Airbnb and low for-sale inventory drove the increase in residential properties prices. Airbnb, in particular, has been the subject of intense criticism in the real estate market of Crete.
Namely, critics argue that short-term rental and home-sharing platforms like Airbnb not only raise the cost of living for local renters – while mainly benefitting local landlords and non-resident tourists – but also provide some property owners the dilemma to switch from supplying the market for long-term rentals or listing their properties for sale – in which investors and individual buyers are more likely to participate.
Last year proved how difficult it is to predict real estate. Many organizations, firms and experts, during the height of the coronavirus pandemic and the strict social distance measures, predicted a property-induced recession in 2021.
Before the COVID-19 pandemic, – and for the first time after 2012 – the macroeconomic outlook for Greece seemed positive.
However, the challenge is now. Greece needs a solid framework to support the real estate sector through a series of development and regeneration projects that would ensure a more sustainable, equitable and resilient economy fit for everyone’s future.
As mentioned previously, due to a lack of supply and decreasing interest rates, residential property prices have continued to rise in double digits.
With the recovering economy and the new Recovery Fund already established, more buyers are entering the residential market of Crete. And, because there is still a limited supply of residential properties, home prices continue to rise even in a low-interest-rate scenario.
The second quarter of 2021 had a little something for everyone. Property buyers are finally getting more realistic about what properties are available in the market and property sellers benefiting from a lack of competitive properties.
According to our research, the real estate market in Crete still tilts mainly toward property sellers, but we could be seeing the first signs of stability.
Ultimately, that would be good for both property buyers and sellers.
In the last 18 months in Crete, residential property prices have shown strong resilience, surprising many in the domestic market.
The momentum seen before the onset of the pandemic is continuing to lead prices higher even though reliable and trustworthy buyers remain limited.
The market is still heavily skewed toward sellers, but we may be seeing the first signs of a return to a more sustainable environment. Because residential properties inventory in Crete is limited – especially city apartments – there may be some competition, so it pays to be prepared when you start looking for a residential property.
According to ARENCORES – our real estate firm in Chania – the decline in time-on-market has slowed for the first time in nearly nine months, indicating that some residential properties are sitting on real estate listing platforms and portals for a longer period.
These market trends point to a much more optimistic and confident behavour for property buyers as we enter the peak of the property buying season of 2021.
Additionally, compared to last year (and year 2019), the number of newly listed residential properties is also increasing. The paradox is that there is no significant deceleration in the growth of residential listing prices. At the moment both, property buyers and sellers in the market are feeling an increased sense of confidence.
As the economy recovers, so do the demands of owners and the sureness of buyers. Property sellers are generally not in a rush to sell, with most preferring to wait before deciding to drop their prices . In Chania, the strongest interest remains in Apokoronas, Platanias and the Old Town.
Now we are also seeing more buyers turn to Agia Marina, Kissamos and Akrotiri areas that are attracting more foreigners. They are investor who have conducted thorough market research as they bid aggressively on good assets.