From slump to slumber
Plus, 14 May 2010
Property agents are taking a dim view of the market following the application
of the latest austerity measures, saying that they amount to a coup
de grace in an already slumped market.
They note that the hike in value- added tax to 23 percent from July
1 is seen as affecting both the existing stock of unsold homes as well
as future ones. Also, the planned revision in the officially determined
- for tax purposes - property rates according to area (known as objective
rates) aimed at their gradual parity with market rates, is seen as
dealing an additional blow.
According to all indications, the first batch of revised rates will
take effect on January 1, 2011 at the latest and are seen as being
30 percent higher on average - meaning that in some areas, primarily
the middle- to high-price ranges, the hikes will be much steeper. Meanwhile,
prices continue to drop rapidly and the quotations listed in ads are
up to 20 percent lower than a year ago.
"Demand is minimal and patience can lead to big opportunities in property
purchases. Additionally, good bargaining can produce a significant
reduction in price. If you have the money to buy - which is no longer
a given - investing in realty is still a good proposition, despite
the negative outlook for the sector," says realty agent Costas Loukopoulos.
In the Athens area, rates now range between 2,200 and 3,200 euros per
square meter in Glyfada and Maroussi, 1,700 and 2,800 euros in Nea
Smyrni and 1,200 and 2,200 in Kypseli.
Agents note that due to the economic crisis, the drop in demand for
purchases has led to renewed interest in rentals, where the rates are
around 10-20 percent lower than they were a year ago.
"The basic criterion is always one’s requirements. A general rule is
that the smaller the house one needs, the better it is to rent rather
than buy. Rents in this category right now are about 15 percent lower
but there are opportunities in bigger houses too,"
says another agent.
The new tax bill submitted to Parliament this week has added all taxpayers
buying or building a first home as well as construction developers
to those already required to submit asset means declarations ("pothen
esches"), no matter how small the property involved.
According to a circular issued by the Finance Ministry on Tuesday,
the measure applies as of April 23 and taxpayers will have to prove
that their income is sufficient to cover the annual expense for repaying
the entire mortgage loan.
The earlier provisions in force required proof of the source of funds
for repaying the interest alone.
If proof is not forthcoming, the taxpayer will be subject to a tax
equal to the value of the property and tax authorities will investigate
whether the money has originated in illegal activities.
The new provisions also abolish retroactively as of January 1, 2010
the waiver from the asset means declaration of loan repayments both
for farming equipment and the purchase of land by developers.