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Property prices will further drop next year

23 May 2013 / 18:05:54  GRReporter
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Indeed, there is a good response from Moody's and Fitch. There has been some talk of economic stabilization and even of slow recovery of economic growth next year. We are starting to recover but I think that it is still too early to get excited. If the government does not introduce any changes in the tax system, we can “sink” again because this year the taxpayers will bear the heaviest burden on revenue and property.

Banks are also about to complete the process of recapitalization. Do you think that they will take part in the recovery of the real estate market?

The recapitalization of banks is also an important step in restoring economic stability, but other steps should follow it.

The country needs to start producing in order for it to heat the engine of the economy. If there is no economic growth, there will be no recovery of the real estate market or of other sectors of the economy. We need to start producing output that will be consumed in the country and that will be competitive abroad in order for exports to increase, which will reduce the trade deficit and create opportunities for development.

Which were the best years for the real estate market?

The best years were between 2000 and 2006. Then there was a steady growth in prices in the market, which was based on real values. After 2006, two major factors contributed to the artificial rise in prices and this helped the creation of an unhealthier environment. One of the factors that had affected the prices was the government's decision to raise the tax on the transfer of property from 13% to 19% in 2007. The increase in the property tax assessment had also played a role. People rushed to buy before the increase in the tax assessment and the tax on property transfer. These two factors triggered the demand, which influenced the prices.

So, were real estate prices artificially inflated in 2006?

Not to the extent to which they were inflated in the USA, Ireland and Spain. The crisis in the countries where the prices were really beyond any logical boundary (bubble) had started in the real estate market. In Greece, the entire economy had collapsed first which hit the property prices. This means that we had not gone much beyond the actual market assessments in the years after 2006.

Who is interested in buying property now?

Greeks are not currently interested in buying real estate. They are trying to sell it. Foreigners now are interested in entering the market but they have a choice. If they face difficulties here, they can turn to Croatia, Turkey, Bulgaria or Albania.

However, Greece has some major advantages, which play a very important role in making a decision of this type - some of the cleanest waters in the world, the beauty of our islands is recognized worldwide and the weather is nice and warm almost all year round. This means that we can expect a stronger interest in houses with a small area in coastal regions or islands in order for the owners to pay less in taxes rather than in the real estate market as a whole.

Tags: EconomyMarketsGreeceReal estateCrisisOpportunitiesRussell Crowe
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