Loans are given, money is there, but there is not enough real estate

A solution to disposing of suitable homes that have come into ownership of the banks from auctions is being considered, but again the plan concerns a limited number.

Only 1,400 young people and couples between the ages of 25 and 39 were able to find a property for their wallet and fulfill the criteria of the “Bayti” program, which provides housing loans on favorable terms, such as subsidizing interest rates from 75% to 100% for those with several families of children.

Demand for the program is not a problem, as the number of applications has exceeded 20,000, which is twice the number of beneficiaries. According to banks and brokers, the problem lies in the lack of real estate. The available housing supply is limited, as there has been a long period of no building activity due to the debt crisis.

According to brokers in Attica, properties available for sale or rent are estimated at about 65,000. Of these, a maximum of 15,000 meet the criteria for a home scheme. For their part, banks stress the problem of the necessary supply of adequate housing as orders pile up in stores.

Bank executives explain that under the program, the loan is pre-approved, at no cost to the borrower, and then the interested party has two months to find a property and disburse the loan. Experience from the first month of the program’s operation shows that those interested find it difficult to find available properties of up to 150 square meters, with a value of up to 200,000 euros, which at the same time cover their housing needs.

Also, under the program, properties must be over 15 years old. Thus, very old houses are found, for example. 60 years old and require additional costs for renovation and reconstruction, whether they are very small or in areas that do not serve their needs.

Another problem with the age of properties is that older homes usually have planning and other issues pending, resulting in the need for more than six months to complete formalities. During this time, the bank will have to pre-approve the loan three times … However, at the same time, there are those who buy real estate without a mortgage or without the housing program, and do not have the constraints of time or money immediately available.

As noted by banks, nearly 80% of real estate sales are made without a mortgage. This fact, combined with demand and time pressures to find a property in a couple of months through the My Home program, drives prices higher even for older properties.

slowing down

Banks are also seeing a slowdown in new mortgage payments due to higher interest rates and continued rate increases. The estimate for new mortgage payments for this year was €1.35-1.4 billion due to the “Bayti” programme. However, the disbursement of these loans has been slow and the overall demand for housing loans has been limited.

Banks and brokers are looking for solutions limited to ways that can increase the supply of available and suitable real estate. Among what is being considered is the disposal of part of the residential real estate that fell to the banks from auctions. However, their number is limited, as auctions prioritize high-value properties and those that can be included in portfolios and sold as a “package”.

According to estimates by banks and loan management companies, real estate with loan portfolios is estimated at about 600,000. Half of these, approximately 300,000 are classified as residential properties (houses). However, only 10% to 15% of them take the auction route over 5 years. Therefore, this solution has a limited scope.

For properties in management companies that are up for auction, market executives make it clear that they cannot solve the specific supply problem. This is because in the auction the interested party must have 30% of its value. With the My Home program, no loan can be given for the auction, or if someone has 30% to participate in the auctions, the My Home program will not be required. Finally, it can take up to a year to complete the process, i.e. the conversion.

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