According to analysts, the construction and real estate market is one of the main sectors of the Greek economy. Today, however, almost no new buildings are under construction and the typical yellow ads for sale or for renting of residential and commercial sites, are more and more often filling street poles and windows of real estate offices.
GRReporter contacted President of the Hellenic Association of Realtors, Argiris Maniatis, who explained why there is a decline in sales, what the interest in Greek properties shown by local and foreign investors is, and also expressed his belief that the revival of the Greek economy will start from the property market.
Mr. Maniatis, how has the real estate market been moving since the crisis to date?
Currently the real estate market is declining. As you know, the market is a matter of psyche. Well, the Greeks' psyche today is at a very low level and property prices reflect this, so they are falling.
How large is this decline?
It is related to the overall fall in incomes. But the reduction is still different from region to region and depends on the ratio between supply and demand. However, on average, we can say that it is around 20-50 per cent compared to prices in 2008. As I have already stated, the first reason for this decline is in the psyche of people. The second is, that buyers are waiting for the prices to fall further. Under the pressure of high taxes some citizens decide to sell their properties quickly, offering very good prices indeed.
Are Greeks buying or do they prefer to wait for a further fall in prices?
I would say both. There are properties which were previously not sold because they were preferential and their owners had no reason to sell them, but they are now offering them and the interest in such properties is great. People are also buying homes when they get married, or if new family members appear. Others are simply waiting for bigger price drops. Everything depends on the psyche, the nature and needs of buyers.
What changes did the increased taxation cause to property? What is the percentage of people who are selling their property to avoid paying high taxes?
The percentage of people who prefer to sell their property to avoid high taxes is great but I cannot quote an exact figure. In all cases, all taxes imposed on property, together with the fact that more and more tenants are unable to pay their rents on time or at all, have forced a number of people to try to sell them.
However, these are mainly homes. Availability of large properties, bought for investment purposes, is not that great because their owners are waiting for improvement in the market conditions in order to sell them at higher prices than today's.
The fact that the majority of Greeks live in their own homes is known from far back.
Is this true and what is the percentage of rented housing?
Indeed, the percentage of Greeks who live in their own homes is very high. But let's not forget that they inherit properties from their parents in their birthplaces. These are properties that people do not want to sell because they are emotionally linked to them and don’t see them just as a business transaction. This fact has really increased the percentage of ownership.
At the same time the percentage of rental properties remains high. It is explained by the fact that some people just want to move to a better and more comfortable home than the inherited one.
How are rental prices moving compared to the period before the crisis?
Rental prices have tangibly fallen. Nowadays, if a homeowner wants to compete, on the glutted with offers, rental housing market, which is such mainly in large urban centres, they usually reduce the offered price. Sometimes they bring prices down even to 50 per cent compared to previous years. We currently have many such properties, whose owners are looking for tenants, since a lot of economic immigrants have left Greece, because they hadn't been able to find work. Also, many Greeks have returned to their family homes because after the reduction in their income, they cannot afford the high rents.
Is there a legal basis on which the tenant may request a rent reduction?
The Civil Code authorizes the tenants to request a reduction of between 20-40 per cent from the owner under certain conditions: a reduction in their income, if they have been made redundant, and if there is a large supply in the area, where the housing is. Nowadays, in many cases these conditions are present.
Is there a decline in your work? Have realtors cut prices for the services they offer?
Yes, there is a decrease which is caused by the fall in the number of transactions. The total loss compared to the pre-crisis period is almost 50 per cent. In most cases the percentage of our profits has remained the same, because difficulties in our work have risen much in recent times. Now it is much more difficult to complete a deal than several years ago.
Then, to complete a purchase of an average-sized home at a price of between 200 - 300,000 euro, buyers calculated the price in instalments to repay by means of a bank loan. Now they have to withdraw money from their savings in order to buy a certain property. It is one thing to calculate costs amounting to 1,000-1,500 euro per month, and quite another to give a sum of 200 to 300 thousand euro all at once.
Is there interest in Greek properties from abroad? Which types of property are potential buyers interested in?