Real Estate in Greece: the difficulties ahead

15.03.2011 09:30
Real Estate Market Analysis | Real Estate in Greece: the difficulties ahead Over the past year, Greece has done a lot for the improvement of financial situation. By reducing government spending, raise taxes, reduce the salaries of state employees and pension benefits the country has managed to reduce the budget deficit to 4,2% - to 9,4% of GDP.

In May 2010, Greece received from the EU and IMF loans worth 110 billion euros, which were granted in exchange for an agreement on austerity measures and structural reforms, writes tranio.ru.

Related article: Real Estate Market in Germany - 2012

Compatible with the EU and the IMF stabilization program would increase the tax, spending cuts, privatization, tightening laws against tax evasion and labor market liberalization.

In the next three years from property sales of state companies and organizations, the Government expects to receive up to 7 billion euros.

The country's leadership is confident in achieving the goals and plans in March to get the next credit tranche amounting to 15 billion euros.

Real Estate Market: Olympic Launch - 2004, severe neglect - 2008

After the Olympics in Athens in 2004, Greek real estate market quickly went up. Greece attracts not only hundreds of thousands of tourists and property buyers. Especially went up Crete, where the cost of villas for the year could grow by 30-40%.

When the crisis has stepped in Europe and spread from Britain and Germany to neighboring countries, foreigners have rushed to sell their homes, which led to oversupply in the market and a sharp drop in prices.

Real estate in the country and continues to get cheaper. According to the Bank of Greece, the average price of apartments in the III quarter of 2010 decreased by 4,3% compared with the same period in 2009. In Athens, the annualized price of apartments fell by 3.1% in Thessaloniki, the second largest city in the country - on 9,7%, and in other cities - by 5,9%.

It is noteworthy that the new housing (up to five years from the date of commissioning) has fallen in price on 5,2%, while older apartments have been stable, losing in the value of 3,7%.

Volumes in the mortgage market fell and interest rates, by contrast, went up. For example, rates on loans with a fixed interest rate of up to one year increased from 3.05% in January to 3.36% in May 2010. With regard to loans with a fixed rate for a period of one to five years, in January the rate was 4.6% in April - 4.84%, and in May fell slightly - to 4.73%.

The mortgage market in Greece is sensitive to fluctuations in interest rates. Most mortgage borrowers hold loans with a fixed rate only for a year.

Yield Greek real estate is relatively small. In August 2009, return home in the heart of Athens, ranged from 2,5 to 2,7%. The suburb is performing better: yield flats ranged from 3 to 3.8%, and the houses - from 2,7 to 3,4%.

The biggest profit from rental property in Crete has demonstrated - from 3,4 to 4,9%.

Housing remains inaccessible for local people. Notary fees are a serious burden for first home buyers. Their reduction from 1,2 to 1% is not enough to reduce the cost of the transaction.

Activity in the construction sector is low. In the I quarter of 2010 was issued only 12,690 building permits, which is 2,8% less compared to the same period in 2009.

Interestingly, the peak of construction occurred in 2005, a year after the Olympics. Then entered the market nearly 200,000 housing units. Despite the fact that construction has virtually no conducted, the market is a huge oversupply. Estimated Wall Street Journal, in 2009 the market had extra 250,000 new homes.

Disappointing forecasts


Speedy restoration of the Greek economy should not wait. If in 2009, some countries began to emerge from the crisis, the negative trends in Greece is gaining momentum.

Experts believe that by 2011 the unemployment rate has increased and reached 13% compared to 9,4% in 2009.

Special hopes are pinned on the tourism sector of the country, giving a fifth of the income the Greek economy. However, he was seriously injured on a background of protests, riots and debilitating strikes.
www.tranio.ru

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