Why are rental rates skyrocketing?

According to the available data, residential rental rates have been rising much faster than salaries in recent years, making some neighborhoods, and especially in central Athens, too expensive for young house-hunters. Why is this happening? And what can be done about it?

Oddly enough, skyrocketing rents are a sign of both a positive and a negative development. Increased demand for housing is an indication that the city has become more attractive, as the rule is that residential property prices and rents are stagnant when the local economy is struggling. In contrast, a city that is fast turning into a magnet for younger residents tends to result in increased pressure on the property market.

The crucial question is whether supply will rise sufficiently to absorb the increase in demand. If it does, new residents (and those who already live there) will be in a position to...