House prices down, outlook uncertain
Athens Plus, 17 April 2009

The ailing residential property market in the Attica area has been giving mixed signals regarding its recovery.

Realty agents and banks are noting that, even though there has been no spectacular rise in the number of transactions - which remain well below last year’s levels - buyers have started to show greater interest and applications for mortgage loans have increased.

However, that interest has been seen in the areas where prices are below average and has been focused on small apartments under 80 square meters. One such area is Koumoundoinou Square, south of Omonia, which borders on the neighborhoods of Psyrri and Metaxourgeio and where most buyers are immigrants.

Meanwhile, banks are continuing to finance only up to 75-80 percent of property prices. Market players consider that mortgage rates have dropped to particularly low levels and, even though prices have nudged lower in recent months, the resistance they see does not bode well for any further steep decline.

By contrast, others consider that any recovery is still far off and point out that building activity continues to decline, demand is subdued and prices as a whole are about 15 percent lower than last year.

Indeed, some agents say that prices may decline further by up to 10 percent, arguing that their level is higher than justified by the economy’s growth prospects and the levels of wages and rents.

If loan disbursements start to gradually pick up over the next few months, realtors say that prices could be expected to start converging with the fundamentals of the economy toward the end of the year. If not, then prices may recede even more, and this is the dominant view in the market at present.

According to the latest survey by the Athens University of Economics and Business, 62 percent of real estate agents expect prices to fall further this year.

At any rate, the number of real bargains remains limited and this is due to the fact that rock-bottom prices are being offered only by developers completely out of liquidity, who are still a rather small minority.

However, it is certain that throughout the greater Athens area prices are now lower than before the crisis. For instance, apartments that used to go for 320,000 euros now cost around 280,000 euros (12 percent lower).

Some people claim that any bargains still remain within the purview of a closed circuit of developers and business people and that the fall in prices has yet to spread.