George Sitaras for Hellenic Αssociation of Realtors

Greek market report

The Greek Real Estate Market, the first half of 2009, continues to present a medium price decrease that goes up to 7%, according to the estimations of the Bank of Greece.

The crisis leads to turn to residences of less area, increase of the percentage of cash transactions and of the portion of cash to the total financing, while a particular resistance is observed in the plots’ prices. At the same time, an enhancement of large shopping precincts at the expense of the local markets, with rent reductions and renegotiation of leases and contracts is observed.

The real estate agencies increase by little the percentage and assume that it is a matter of a mild correction of 10%-15%, large decline of demand mainly for new-built residences and preservation of the level of the new-built residence stock of 200.000 units.

Moreover, on January, compared to last year, a 40% decline was observed concerning the bank appraisals for loan granting.

The proportion of old and new-built residences that are bought is 70% - 30% respectively, with the demand for residences of 70-90 sqm to be increased.

Relatively to the land values, a stabilization of demand and price is recorded as the constructors do not demand any more land to build with quid pro quo, because of the stock that they have. Due to the fact that in the Greek market small constructors activate and not large companies, the drop in prices is not big.

According to a study of the statistics department of University of Athens, by estimation, at least 200.000 new-built residences all over the country remain indisposed. From those, 130.000 are in Athens and Thessalonica and 70.000 in the rest of the country. The index of building activity depicts, to an important extend, and the future intentions and decisions of the constructors. On October, according to the data, the overall building activity decreased by 17.4% in relation to the corresponding period of last year. The decline of the building activity, which is of determinative importance to the GNP, constitutes an indication that the Greek economy slows down. Disappointing is the analytical data, concerning the building activity per district. Given the fact that building activities start one to one and a half years after the emission of building license, then this decline will have an impact to all 2009.

The properties’ prices remain relatively high and the banks retain the “faucets of lending”.

Relative is the situation to the professional properties.

Access to bank lending is needed, in order the property market to become attractive again. Low risk loans must be placed to the investors, so that the money that the banks received from the governments is transferred in the market. Low interest rates and lower selling prices could give a boost. Furthermore, the shrinkage of the real estate market is not even to the bank institutions’ advantage.

A positive aspect of the current conjunction is that many opportunities appear for the collected investors.

The contractors are more resilient to their demands and the interested parties in the rural residence market have already activated in product research. The government, inside the crisis, made haste to support the building branch, since the last years, along with tourism, essentially set in motion the economy. The following support measures were announced:

• An additional 25% guaranty of loan, where until today, banks do not grant, but the consumers cover. With this way, the level of housing loans will cover 100% of the property’s commercial value and not 75% that apply until today.

• The reduction of notary fees, from 1,2% to 1% of the property value.

• The percentage of interest is doubled, from 20% to 40%, for housing loan, which is deducted from the income tax.

• Moreover, while until now the tax reduction pertained the acquisition of first residence until 120 sqm and the interests that correspond to the proportion of the loan up to 200.000€, henceforth the reduction will pertain the acquisition of any residence up to 200 sqm and the interests that correspond to the proportion of the loan up to 350.000€

• The proclamation of a plan, concerning the improvement of the energy behaviour of buildings that were constructed before 1980, resulting to expense reduction for energy.

Even though, the measures were characterized as insufficient, there were definitely taken to the right direction.

Optimistic is the recorded tendency for resurgence of the buying activity for residences in the market, during the last month. Even if a spectacular increase of abalienation is not reported, buyers have appeared. The banks emphasize the increase of the number of petitions for housing loans, a fact that is considered a definite indication for the demand resurgence in the residence market.

At the same time, the prospective buyers, as we have already said, are interested in residences of less than 80 square meters, trying to minimize as much as they can the buying expenses.

A big delay is observed in the institutionalization of the Energy Efficiency Certificate of buildings (EEC), as the proper ministry has not decided yet concerning its implementation.

Lastly, I should mention the continuation of debate for the bill that is going to determine our working rights and the expectancy to be voted, if we do not have elections soon.

Generally the Greek real estate market, in meddle of the world-wide but also the domestic crisis, shows remarkable resistance and collectedness.

George Sitaras for Hellenic Αssociation of Realtors