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Property market still sluggish
Athens 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 purchase.

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.

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