The possibility of acquiring a home in Greater Athens through bank borrowing remains largely inaccessible, even among households that are considered to meet the financing criteria, like excluding low-income citizens or those with other debts (credit cards, consumer loans, tax debts), according to a Bank of Greece report published on Monday.
For the first time, the BoG has attempted to capture the possibility a household has to acquire a first home through a mortgage in the capital, where the greatest difficulty in finding affordable housing has been the steady price increases.
To calculate the ability to secure the necessary capital, the BoG created the Housing Finance Capability Index, which measures the extent to which a household can repay a mortgage for a typical average-value home in the capital.
When the reading is equal to 1 or more, the submarket under investigation is affordable for a household as a means of entry, because the mortgage loan installment for the purchase of the home does not exceed 25% of its income. Conversely, when the index value goes below 1, the purchase of a property through bank lending becomes unaffordable.
The BoG’s research reveals that the index in Attica ranges close to the limit of 1 and specifically between 0.7 and 1.4, which, according to the BoG, “indicates marginal or low affordability.”
Based on the results of the index, the best possibility of purchasing a home with bank financing is recorded in the housing market of the western suburbs, while the southern suburbs are recorded as the least affordable option.
The index for the northern suburbs is also estimated to be lower than 1, while the indices of Piraeus and the rest of Attica are estimated to be slightly higher than 1. Finally, for the center of Athens as a whole (including the most affordable areas, beyond the expensive historic center) the index is estimated to be marginally above the limit of households’ housing financing capacity.
These results are considered particularly disappointing and revealing of the difficulty of access to the housing market, if one also judges by the criteria that the BoG takes into account for compiling the index, which excludes low-income households.