Greek real estate moves into catch-up mode
By Dimitris Kontogiannis
THE GREEK REAL estate market is likely to remain buoyant in the medium term. It is expected to benefit from a rise in disposable income, low real interest rates, demographics and a change in household housing preferences, according to bankers and other business executives.
“We are very positive about the prospects of the Greek real estate market, especially the residential market,” says Michael Masourakis, head of economic research at Alpha Bank. “We think demand for housing is going to remain strong in the years ahead, with GDP projected to grow annually by 3.5% or more and real interest rates to remain low.”
Masourakis says the evolution of house prices will also be influenced by supply, noting that the limited supply of land for development in Greece supports prices.
Economists and real estate business executives put the average house price increase in 2005 at between 10% and 15%. Buyers rushed to purchase property before the beginning of 2006 to avoid paying additional taxes since the finance ministry had pre-announced an increase in what is known as the objective value of properties, on which taxes are calculated, as well as the introduction of value-added tax on new building permits issued from the start of this year.