House prices to continue falling

In a report, the central bank said that house prices fell significantly from 2011 onwards, with apartment prices falling by an accumulated 33.4 pct in the period from 2008 to 2013, based on data collected by credit institutions, although the rate of decline was even larger based on data collected by real estate brokers.

The central bank said that apartment prices fell by 35.8 pct in Athens and 37.1 pct in Thessaloniki. During the crisis, households turned their investment interest towards older, smaller and cheaper houses, in medium cost areas.

The report also noted a rise in cash transactions as bank credit became less accessible. Only 17 pct of all transactions was made with the participation of bank credit, from 82 pct in early 2009, while the average loan rate was 35 pct of the property’s value, from 70 pct in early 2009 according to ANA-MPA

The commercial real estate property market shrank significantly in the last few years, with leasing and purchase values falling by an average annual rate of 16.3 pct and 16.9 pct, respectively, in 2013.

The retail property market showed small signs of stabilisation, after suffering the largest pressures since the crisis erupted, while tourism real estate property offers positive expectations.

The central bank noted that the prospect of recovery in the Greek real estate market depended, among others, on a further improvement in business and household expectations, improving bank credit and limiting uncertainties over the outlook of the Greek economy. The report stressed that a heavy tax burden has helped deepen a crisis in the real estate market.