Prices drop in Greek real estate market

According to the Bank of Greece’s Monetary Policy report published on Tuesday the real estate agencies have reported an even greater drop in prices.

The cities where the biggest drop of house prices have been recorded are Athens and Thessaloniki. Large properties in the most expensive areas of these cities are being affected the most.

The report comments that the Greek property market is being characterized by excessive supply and a significant decline in demand. This can be attributed to the continuing increase of unemployment, the decrease of households’ disposable income, high property taxes and the instability of the tax framework. Other important factors in the shrinking demand for houses are the strict terms under which the banks issue loans and the lack of cash flow.

The Greek government in order to revive the weak housing market, has recently offered residence to foreign investors who are purchasing or renting property of over 250,000 euros.  The government’s plan, which is similar to measures adopted by Hungary, Spain and Portugal, is valid for five years and open to renewal.

In a recent report on the Greek holiday home market, property company Savills noted a 30% drop in the average price of a Greek Island property since 2008, just before the start of the Greek financial crisis.

Most real estate dealers say Greek holiday home transactions have stalled recently but this means the stock of unsold properties is steadily increasing.

Luxury holiday homes in the Greek Islands now average at €6,700 a square metre, while the average asking price for a modern two-bedroom house is just €2,400 a square metre.

These prices are for modern, high-spec homes in popular areas and with a sea view. These are only a small portion of the properties currently up for sale and there are bigger bargains to be found. Estate agents can offer big discounts on properties that have been on the market for more than a year.

The most expensive areas are the most popular Greek holiday islands of Mykonos, Santorini and Corfu, while certain area of Crete and Halkidiki still attract large numbers of buyers from abroad.

The biggest buyers of holiday homes in Greece are the British with Russians, Germans, Chinese and Turks not far behind. There is also a small, but rising, demand from Greeks living abroad who want to return to their native islands.