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Free Falling – The Real Estate Market in Greece

Free falling – the real estate market in Greece
Free falling – the real estate market in Greecehttp://www.flickr.com/photos/pedrosz/8309058736/sizes/m/

Foreigners have started buying properties in Greece since last year, more than in other years, since the granting of a residence permit investors outside the EU who buy properties with prices over 250,000. And not only investors, but also private people are making purchases for a vacation or even residential home in Greece. Why are they all crowding to buy now? The answer is simple: since the Greek economy is still in decline, the real estate market has gone down with it.

What’s Happening

Two-room apartment prices in Athens have dropped to 10.000-15.000 euros after the collapse of the real estate market in the economic context, and for this year, the Helenic Realtors Federation expects the trend to continue in an accelerated decline.

The collapse of the prices has been caused by the desperate efforts of a larger and larger number of owners to sell in order to get rid of the tax burden. Revenues to the budget from real estate property taxes are estimated to reach 3,8 billion euros this year, compared to 500 million euros in 2009.

Also, immigrants prefer to sell in order to leave the country, while Greek owners have difficulty finding tenants, and the sums they receive barely cover the taxes.

Prices

"According to Mark Moz from Pallspera" The prices have considerably fallen generally all over, but the most affected parts are two-room apartments in Kato Patissia, Kypseli, Aghios Panteleimon, Sepolia and Pangrati, as well as the ones situated at the ground floor of buildings in different areas of Athens. Even at prices of 10.000-15.000 euros, the demand is almost nonexistent.

A recent survey of the Bank of Greece shows that a home is sold after being on the market for an average of 10 months, while the difference between the asked and the received price is of about 20%.

Collapse

The Helenic Realtors Federation warned that the market could enter a collapse due to the new property taxes.

After a price drop of 30-50% in the last years, due to recession and taxes, the new law project, instead of reducing excessive taxing, freezes transactions, warned the president of the realtors’ organization, Ioannis Revithis.

According to him, prices in 2014, a critical year for the real estate market, will continue to drop with about 20%.
The Helenic state had to introduce a home tax at the demand of international creditors, as this measure was considered to be the only source of income.

The Economic Situation

Greece is in its sixth year of recession, following the global crisis and the harsh austerity measures imposed by international creditors – the states in the euro area and IMF – in exchange for two loan packages.

The government had to appeal to an outside help of 240 billion euros in order to avoid going into collapse, after it couldn’t access the international financial market due to extensive debts.

The European Comission, IMF and the Athens government are waiting for the economy to come to this year, but the Organization for Cooperation and Economic Development and Moody’s rating agency have warned that the recession will continue this year too, but with a lower contraction of the GDP.