Opportunities for first-home buyers
Athens 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 year.

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.