upturn in sight for real estate market
News, 26 February 2010
The outlook for the realty sector remains bleak and market players
will have to wait until at least the second half of 2010 for some kind
of a recovery in demand, according to projections by Danos - BNP Paribas
Data regarding building activity show a 25 percent drop in volume so
far this year, indicating that the supply of new houses will remain
significantly subdued, helping the market partly absorb the existing
stock of unsold units, which the Technical Chamber of Greece puts at
Investment in housing fell 19.45 percent in 2009, while mortgage credit
expansion slowed to 4.4 percent in the first nine months, from 11.5
percent at the end of 2008. Danos - BNP Paribas Real Estate forecasts
that the trend will continue this year but at a slower pace, as it
sees the fall in investment easing to 9.5 percent.
As regards prices, they are seen as declining further from the average
10 percent drop in 2009. Owners of residential properties larger than
120 square meters are expected to realize steeper losses than smaller
dwellings, due to a greater fall in demand. Not surprisingly, the supply
of newly built houses for rent has significantly increased.
The situation is causing developers, property owners and realty agents
to expect the government to soon clarify its intentions regarding new
property taxes, as the prevailing uncertainty is proving detrimental
to recovery prospects. Many smaller developers, in particular, are
in the red and laying off staff while there has also been a sharp drop
in construction-related jobs. An estimated 100,000 builders are without
work as many fear the worst.
"The climate in the market is frozen, as no taxpayer can predict what
tomorrow will bring. They are postponing purchases as they donít know
what taxes they will pay and how much of an income they can count on
for loan installments," developers say.
No one knows, for instance, whether the so-called objective property
rates - revised by the government for tax purposes according to area
every few years - are going to be updated this year or next. It is
also unclear what the basic tax-free bracket for first homes will be,
while the tax on large real estate looks as if it will affect a large
number of properties valued at over 400,000 euros.
The picture also remains unclear regarding the upgrade in the energy
efficiency of buildings and the repercussions of the requirement of
a "green" certificate from prospective sellers of old houses.