Real estate slump presents buying opportunities
Athens Plus, 13 August 2010

The economic downturn has dealt a serious blow to the holiday housing market, with some prices more than 25 percent lower than 2008 levels. The slump has brought some of the construction companies that borrowed to finance further expansion to the end of their tethers. The property market on several islands and other popular destinations is in an acute slump.

"Holiday housing is the first option for liquidation when things go awry," said realty consultant Nikos Yiannoulelis.

Potential buyers, both Greek and foreign, have been abstaining, mainly due to the economy’s uncertain outlook. They fall into three categories: those who will buy a holiday house to use when on vacation; those who buy something to have when they retire; and those who buy as an investment.

The areas mostly hit are those that flourished in the 2004-2007 period, such as Crete and the Cycladic Islands.

Greeks represent 80-90 percent of buyers in the Cyclades and about 50 percent of those on Crete, while Britons comprise the largest foreign. segment, followed by Germans and Scandinavians.

On Myconos, realtors estimate that some luxury villas are being offered at discounts of more than 25 percent compared to a couple years ago. The average price has fallen to 5,500 euros / square meter from 7,500 euros/sq.m. in 2009.

On Crete, prices vary from between 1,700 euros and 1,900 euros/sq.m., against about 2,500 eu- ros two years ago. On Corfu, where the Greek-to-foreign buyer ratio is 30:70, prices average out to about 3,000 euros/sq.m.

In the residential property segment, prices in the first six months of the year fell by an average of 4 to 10 percent, according to Aspis Real Estate, which describedthe market as "frozen" due to poor investor sentiment.

Prices of older properties in central Athens with an average age of 20 years saw the biggest drop, falling 10 percent, while the price of newly built properties in the northern suburbs showed the most resilience, dropping just 4 percent.

In the southern suburbs, prices fell by an average of between 6 to 8 percent, depending on the age of the property, while prices in the western suburbs retreated by an across-the-board 8 percent.

According to experts, the real estate market is not seen as rebounding until the second half of 2011, due to the large number of unsold homes that flooded the market before the economy started contracting in 2009.