Gradual upturn in sight for real estate market
Athens 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 Real Estate.

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 180,000.

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.