Average real estate prices in Greece fell 7.7% in the first quarter of 2010 from a year earlier as the country steers through its first recession in over a decade. As the country struggles to over come its debt problems it is perhaps no surprise that property is not immune to the financial woes and it does provide opportunities for real estate investors to buy at a low price.
The picture is mixed as some parts of the country have seen prices fall more than others, according to figures from Propindex and the Foundation for Economic and Industrial Research.
Prices fell 5.4% in the Attica region, which includes the capital Athens and 9.8% in Thessaloniki, Greece’s second biggest city. Prices dropped 12.6% in the rest of Greece in the first quarter.
Apartment prices fell last year to 2006 levels following a two year rise, according to the report which uses bank figures, including those of Greece’s three biggest lenders.
Commercial property vacancies in Athens increased 1% from the first quarter of 2009 to 17.7%, a rising trend since 2007, the report also shows.
The Greek economy is in recession and Prime Minister George Papandreou has raised taxes, cut wages and reduced spending in a bid to tame a deficit that reached 13.6% of gross domestic product last year, more than four times the European Union limit.
Changes to the real estate tax system are currently being examined by government officials. Taxes on real estate transactions in Greece are currently based on the government’s assessment of the property’s value, which considers the area and the amenities, rather than the actual market value, which is generally higher. Finance Minister George Papaconstantinou proposes to change this next year to bring in more revenue and mean higher costs for buyers and sellers.
The low prices offer bargains for buy to rent property investors who aim to let out their properties during the busy summer holiday season. Top of the range luxury villas in parts of Greece can fetch €5,000 a week in rent.
It has also been reported that the Greek government is proposing to sell or offer long term leases on property it owns on the country’s 6,000 islands to bring in much needed cash. Mykonos, which is one third owned by the government, is expected to be one of the first to be offered. It is likely to go to a real estate investor who can not only afford the price of the sale itself but who is also willing and able to invest cash into developing a new luxury tourist complex on the island.