market not in crisis but recovery still far off
Plus, 21 November 2008
The Greek property market so far seems to have escaped the slump experienced
by its foreign peers but a recovery is still far off, experts say.
"The market slowdown in Greece has not yet assumed crisis proportions,
as in other countries... Demand in the residential property market
is currently being affected by the global financial crisis which is
leading households to postpone building permit applications," Alpha
Bank said in a research paper.
According to Bank of Greece data, nominal property prices in all urban
centers other than Athens actually rose 2.3 percent on average in the
first half of the year, compared to the same period of 2007. Last year,
the respective figure was 3.8 percent. In the Athens area prices appear
to have remained at last year's level, despite the fact that demand
is still on the rise, as indicated by the 15.1 percent increase in
mortgage lending in the first nine months.
Such figures are leading analysts to project a market recovery in the
second half of 2009.
"Prospects for the sector continue to be favorable in the medium
term," said the Alpha Bank study, which suggests that the market
problem is not lack of capital but rather in the generally poor economic
However, there are also pessimists who consider that a fully-fledged
recovery will take much longer than a year and will depend on the normalization
of financial markets. They argue that the surplus of unsold houses
will meet demand for up to two years, which means that for supply and
demand to reach equilibrium there will have to be zero construction
for at least one year.
But supply continues to rise at a relatively high rate and it is argued
that demand would have to double to absorb the existing surplus. As
a consequence, according to the pessimists, recovery should not be
expected for three years, provided the world economy also recovers
from its present woes.
It seems a realistic scenario, fully compatible with the qualitative
characteristics of the Greek realty market, that is, the high percentage
of home ownership and the high concentration of population in large