for first-home buyers
Plus, 27 November 2009
The continuing sharp drop in property transactions over the last 12
months may suggest that now is the appropriate time for prospective
buyers to make their move. Demand for new homes over the last two months
is about 15 percent lower than it was in the second quarter of the
The reality is more complicated, however. In truth, the characteristics
of the market today favor purchases of some categories of realty but
not others. First homes are one category for which the current period
seems right to buy and here are some reasons:
• Prices do not appear likely to show any significant
decline over the next 12 months.
• Lending rates are at historical lows and are unlikely
to go even lower. Indeed, analysts believe that the European
Central Bank has resolved to maintain its basic rates at current
levels for at least the first half of 2010.
• The market for first homes will probably not be influenced
by the package of tax measures that is to be announced shortly
(with the exception of very large properties).
In contrast, buying as an investment appears problematic on account
of the tax framework that will apply as of 2010 and is likely to lead
to a significant increase in the tax burden, mainly on incomes. Realtors
also fear that the method by which property values are assessed as
proof of income could act as a disincentive.
Therefore, any buys for investment purposes are considered risky before
the tax parameters are better clarified.
Some property owners are considering selling. However, the current
period does not appear to be the best, as the market has been inundated
with excess supply, providing buyers with the advantage.
Naturally, any assessment has to take into account the needs that are
to be covered by the proceeds of a sale. But it is worth bearing in
mind that it would be difficult for even the most choice properties
to fetch the prices they would have 18 months ago, because, besides
the excess supply, sellers also have to deal with the problem of scarce
liquidity that is affecting the entire Greek economy. If, however,
an owner is resolved to sell, the best advice is "the sooner the better."
Separately, realty agents expect a marginal increase in rents over
the next three months.