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Housing market 'stagnant'
Athens News, 28 May 2010

The lower end of the Greek real-estate market is suffering from the global and local credit crisis, but high-end properties are holding up well, experts say.

"The problem is that most people are playing a wait-and-see game and transactions are not taking place," said Mike Vassiliou, business director of real-estate company NAI Ktimatiki and president of the International Real Estate Federation, Greece.

Prices for homes more than 20 years old and with floor space of between 70 and 120m2 have dropped by 15 to 20 percent, Vassiliou said, explaining that this is partly because it is almost impossible to quality for a mortgage on older properties.

"It's also because this is a market where eastern Europeans, who have made a lot of money in manual occupations in the boom years, have snapped up a lot of low-priced houses in the centre of Athens," Vassiliou said.

"By contrast, in neighbourhoods like Vouliagmeni, Psychiko, Kifisia, Glyfada and Kolonaki prices have remained high," Vassiliou added. "But everyone is waiting to see what further measures the International Monetary Fund might push for and, indeed, whether real-estate companies will see forced sales if Greece’s fiscal situation worsens. At the moment the market is simply stagnant."

Whilst the islands look attractive for property buys for British and Americans who have traditionally bought in Crete and Rhodes, buyers are waiting to see if prices will drop.

"As real-estate agents we are very busy, but no deals are taking place," Vassiliou said.

Transfer taxes applicable at 11 percent in most cases also impact the market. This is especially true after the government in some cases increased the objective property value by up to 40 percent - meaning the gap between market prices and objective values has narrowed to almost zero, he added.

Hundreds of small real-estate agents have gone out of business, Stratos Paradias, president of the Hellenic Property Federation, said in a telephone interview on May 26.

"It's a tenants' market - they call the shots," Paradias said. "It is almost impossible to rent a property. In Athens, over 20 percent of shops lie empty and owners are unable to let them," he said.

This is more than double the situation of two years ago, he added.

The government’s revenue-generating measures, such as the annual property tax (FAP), inheritance taxes and increases in the objective values have already caused further drastic impact, Paradias said.

"It is crazy that the government is putting the value of properties up [for tax purposes] when the market is actually going down," he said. "The new taxes are forcing even more real-estate agents out of the business. For the bigger rental properties it is more like robbery than taxation."

Taxation for properties valued above 800,000 euros has gone up by more than 10 times as a result of the new measures, whilst properties with a value of more than 5 million euros have seen a rise of over 20 times," he said.

Rents are also down for the second year running, official figures showed last week. Residential apartment prices dropped 2.6 percent in the first quarter of 2010, compared to the same period last year, with more slides predicted due to the deepening recession, the Bank of Greece said on May 21.

Data from the Bank of Greece also showed rents have dropped even more steeply for older apartments, where they have fallen 4 percent on average.

Apartment prices fell by 3.6 percent last year. By contrast, prices went up 1.7 percent in 2008 and 4.6 percent in 2007, 12.6 percent in 2006 and 10.9 percent in 2005.

Greece has one of the biggest home ownership rates in western Europe, at 80.1 percent, compared with the European Union average of 70.4 percent, as per European Mortgage Federation data.

Friday August 18, 2017
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