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
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
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.