market still sluggish
Plus, 16 October 2009
Demand for new housing since early 2008 is estimated to have fallen
to the lowest level in the past 15 years and is not projected to recover
substantially anytime soon.
According to the latest quarterly report on the Greek economy by the
Foundation for Economic and Industrial Research (IOBE), the number
of people considering investing in a house in the near future steadily
declined for about a year after the first quarter of 2008.
The trend now seems to have come to a halt, even reversing marginally
around the middle of this year but the number of those who have decided
to buy a house remains extremely low. At the same time however, the
number of those not ruling out a house purchase in the next few months
has been rising. Even though this offers some optimism, researchers
estimate that only about half of them will actually go ahead with the
Most developers have kept prices at relatively high but stable levels
this year and sales remain low. This suggests a slow recovery in construction
activity. The situation has not been made any easier by the stance
of banks, which seem to favor lending to enterprises rather than households.
National Bank CEO Takis Arapoglou argued last week that households
have limited earning power at the present time.
Real estate agents are now anticipating initiatives by the new government
that might help stimulate the market but any such moves look like they
will be restricted to tax measures. During its election campaign, PASOK
said it intended to abolish the state real estate duty (ETAK) and reintroduce
a scaled tax on high property values with a high initial waiver as
well as taxes on inheritances and parental transfers - again with a
high tax-free ceiling.
However, such measures are opposed by realty agents. According to Ioannis
Revythis, president of the profession's association in Athens and Thessaloniki,
what the market primarily needs in order to recover - apart from an
improvement in confidence - is a "revision of the way banks grant loans." "The
market has frozen because 95 percent of lending was stopped," he argues.
Separately, according to realty consultants SouthEast Real Estate,
holiday home purchases in Greece were down by about 5 percent in the
second half of 2009, year-on-year.