Despite the fact there have been numerous attempts to refloat the Greece economy there is no doubt that the real estate market in Greece is still under enormous pressure. While there are some positive signs in the medium to long term, the short-term situation appears to be getting worse with a growing number of properties for sale while buyers sit on the sidelines. This is the rather worrying side of the Greece real estate market because significant falls, such as those seen in Greece since the European crisis, should at some stage tempt buyers back in.
They say the darkest hour is just before the dawn and if we take a look at the figures relating to the Greek real estate market, could we be approaching that final hour of darkness?
A disaster for the Greece real estate market
Since the Greek economy collapsed around four years ago we have seen an official 32% reduction in the value of property. This in itself is a phenomenal figure, only beaten by the collapse in Croatian prices, although the worrying element is that estate agents in Greece suggest the figure is actually closer to 50%. It seems that even an attempt to massage the figures by the Greece government cannot lift the doom and gloom surrounding this particular investment arena.
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There are of course people who will dispute the 50% decline figures but one element of the official statistics which cannot be massaged is the number of sales. If you look at Athens as one individual market there were in excess of 250,000 sales in 2005 although the situation was helped by the Olympic Games. Then again, if we look towards last year there were a total of 3600 sales in Athens which reflects not only a lack of interest in the real estate market but, more worryingly, the suggestion that many investors seem to be expecting further declines in the short to medium term.
As we have seen in an array of troubled real estate markets, foreign investors from areas such as Russia and China are playing a major role in international property markets. There are signs of growing interest from overseas investors although the political arena is far from stable, the finances of the country are still in a mess and until a new and reliable tax system is in place, it is difficult to see any major increase in overseas investors. It is also worth noting there has been an increase in property taxes as a means of attempting to balance the Greek government’s books but this does nothing but give investors another reason not to invest in Greek real estate.
One of the issues which the Greek government will face in the short to medium term is the significant dependence upon foreign investment. This could effectively see an array of famous properties and influential real estate fall into foreign ownership at but a fraction of their value before the crisis. When you also take into account that there are basement flats available for around £4000 in some of the less salubrious areas of Greece this perfectly reflects the ongoing problems.
Unfortunately there seems little in the way of cheer to be expected in relation to the Greece economy and the Greece real estate market in the short to medium term. There is a growing dependence on foreign investment which could change the landscape of the Greece economy for many years to come giving foreign investors more influence over the region. The collapse in property sale numbers, the collapse in property asset values and the ongoing budgetary issues do not appear to give any short-term comfort.
However, is there significant potential in the longer term?