Hard times force mortgage holders to sell
Kathimerini 2 June 2008

An increasing number of Greek property owners now seem to be willing or have been forced to take the tough decision of selling their places. Selling a two- or three-year-old apartment was a rather unusual move some years ago.

As a means of comparison, the same phenomenon in the past affected only 5 percent of the market, with most of the apartment sellers doing so in order to make a profit, i.e. to capitalize on the great surplus value offered by the market from 2000 onward.

“A year ago, we could speak of only one in 10 residencies being sold because of failure or difficulty to repay a loan. Now this number has simply doubled,” commented a real estate professional with one of Athens’s major companies.

Two in 10 homes are now sold because of loan repayment difficulties.

The trend is more evident in the lower- to middle-class areas, where apartment costs are relatively cheaper, and mainly concerns places of up to 100-120 sq.m. of floor space, at prices of between 200,000 and 300,000 euros.

“As a rule, such places are resold by people who cannot repay their mortgages,” another professional said, adding that what lies behind homeowners’ difficulty to repay is primarily poor planning and the failure to take into account possible future interest rate hikes.

For some, reselling their home certainly means avoiding the eventuality of it being repossessed and auctioned by the bank.

However, seen in a different light, the higher number of used apartments for sale is an indirect help for the market as this specific segment now is recording the highest demand.

What is now different than in previous years, apart from generally dropping demand, is the limited amount of business in general and the low number of property transactions.

A crucial period that the market would allow for the estimation of future trends will be from September onward, when demand normally rises. If business is as low as its current levels, it is very likely that property values could drop considerably.


Renting a newly built home is again becoming a popular practice among developers. Offering new apartments for rent was a thing of the past for many years, but is now being seen as a way out of property market trouble. Higher bank pressures on developers who have borrowed drives them into leasing their apartments for a number of years, and this at least helps them to service their loans.

But rentals significantly increase amortization, with property market returns dropping to extremely low levels, even below 5.0 percent. So renting out an apartment would normally be a developer’s last choice.

But again, when it comes to the falling apartment prices, the construction contractors are viewing things as altogether negative. They say profit margins have dropped to alarming levels.

Most prospective home purchasers are now considering either buying an older home or renting a place, instead of buying new. Data provided by property market sources show that in 2007 used-home purchasing deals accounted for 70 percent, compared to 20 percent in 2005.