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There is market demand only for small flats

01 February 2013 / 17:02:58  GRReporter
2352 reads

Victoria Mindova

The financial crisis, the falling incomes and rising taxes have led to a collapse of the real estate market in Greece. According to Babis Haralabopoulos from the body of sworn-in property valuers, who spoke exclusively to GRReporter, the average drop in the prices of commercial properties in Greece is between 50% and 60% compared with 2009 whereas the prices of offices and houses fell by 30% - 40%. The lowest is the drop in the prices of small flats on which the market has been mainly focused recently. "What has been left of the property market manages somehow due to them," said the valuer.

Currently, the government is considering imposing a new property tax to replace the present three different taxes on property. In 2011, the Finance Minister of the time Evangelos Venizelos imposed an extra property tax, which was supposed to be temporary applied until 2014. Its purpose was to fill in the gap in the budget, which had been formed after the intensified recession. The changes in the law, however, will make this temporary property tax permanent.

The coalition government has yet to reach a single decision on how to form the new tax. New Democracy suggests that there should be no tax-exempt threshold dependent on the tax assessment of the property. PASOK insists on defining a tax-exempt threshold for tax assessments not exceeding 50 thousand euro, whereas the Democratic Left wants to impose the tax on properties with tax assessments of over 100 thousand euro. It has become clear after the coalition partners’ latest meeting with Deputy Minister of Finance George Mavraganis, who is in charge of tax policy, that the government intends to impose a tax-exempt threshold without specifying its amount.

"We expect the new tax that is to be imposed by the government to further worsen the situation in the market. Taxes are increasing, the market sentiment is negative, and the people do not know what they will have to pay for the properties they have. This is causing a general instability and as a result, nobody is buying property at present. Everyone wants to sell their unwanted properties, but nobody wants to buy," says the expert.

The government's decision must levy a tax on the revenues from the citizens’ properties rather than on the property itself as stated by the expert. If the property brings some revenue, whether it is inhabited or rented, it should be taxed. If it does not bring revenue, then there is no reason for it to be taxed.

Babis Haralabopoulos from the body of sworn-in property valuers believes that if the government decides that it must impose a tax on property, the tax rates must be very low in order to allow the citizens to withstand the financial burden. Otherwise, people will not be able to pay their debts to the state and the budget revenue will suffer again.

In Greece, 80% of citizens are property owners, which is one of the highest rates in the European Union. The head of the federation of property owners Stavros Paradias is of the opinion that the government seeks to withdraw revenue from the citizens’ deposits through the new tax, because the market has dried up and there is no working capital. Representatives of the tax authorities are also warning that the people will be unable to withstand the burden of the new property taxes. Tax departments are facing serious problems with revenue collection as the citizens en masse are asking to pay the taxes imposed on them in instalments, which reach 36 months in some cases, and as estimated by experts, the new "super" property tax will do more harm than good to the budget.

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