prices down, outlook uncertain
Plus, 17 April 2009
The ailing residential property market in the Attica area has been
giving mixed signals regarding its recovery.
Realty agents and banks are noting that, even though there has been
no spectacular rise in the number of transactions - which remain well
below last year’s levels - buyers have started to show greater
interest and applications for mortgage loans have increased.
However, that interest has been seen in the areas where prices are
below average and has been focused on small apartments under 80 square
meters. One such area is Koumoundoinou Square, south of Omonia, which
borders on the neighborhoods of Psyrri and Metaxourgeio and where most
buyers are immigrants.
Meanwhile, banks are continuing to finance only up to 75-80 percent
of property prices. Market players consider that mortgage rates have
dropped to particularly low levels and, even though prices have nudged
lower in recent months, the resistance they see does not bode well
for any further steep decline.
By contrast, others consider that any recovery is still far off and
point out that building activity continues to decline, demand is subdued
and prices as a whole are about 15 percent lower than last year.
Indeed, some agents say that prices may decline further by up to 10
percent, arguing that their level is higher than justified by the economy’s
growth prospects and the levels of wages and rents.
If loan disbursements start to gradually pick up over the next few
months, realtors say that prices could be expected to start converging
with the fundamentals of the economy toward the end of the year. If
not, then prices may recede even more, and this is the dominant view
in the market at present.
According to the latest survey by the Athens University of Economics
and Business, 62 percent of real estate agents expect prices to fall
further this year.
At any rate, the number of real bargains remains limited and this is
due to the fact that rock-bottom prices are being offered only by developers
completely out of liquidity, who are still a rather small minority.
However, it is certain that throughout the greater Athens area prices
are now lower than before the crisis. For instance, apartments that
used to go for 320,000 euros now cost around 280,000 euros (12 percent
Some people claim that any bargains still remain within the purview
of a closed circuit of developers and business people and that the
fall in prices has yet to spread.