Today, individuals that are interested in buying real estate in Greece are faced with a dilemma: Whether to purchase a piece of property immediately, before the property’s objective value is increased, or further wait with the hope that real estate prices will decrease in the near future?
The objective value of a piece of property in Greece relates to the taxable value that the Greek revenue department assigns to a piece of real estate. The market value is the actual price paid for the real estate. The objective or taxable value is usually equal or less than the market value (at least up to now) and may start from 10% and reach up to sixty percent of the market value. The remaining amount (the market value minus the objective value) is a gift usually to the black economy and is strangely accommodated (at least up to now) by both the revenue service and the ministry of finance.
Purchase or Postpone?
In any part of the world, housing-related purchases are considered high risk purchases, not only because of the large sums of money needed, but because of the possibility of cognitive dissonance setting in after the purchase. This is one strong reason that individuals consult with both family members and close friends, and also with reference groups and market experts such as real estate agents.
As far as Greek real estate goes, one current train of thought suggests that it is better to purchase before the year’s end, thus being spared from the incoming increases in the objective value, or taxable value of the piece of real estate in question.
Another train of thought advises buyers to wait, with the logic that the increases in objective value will slow the market even more, and the resulting fall of real estate prices will be more than the expected government objective value increases, thus rewarding the patient buyer with a net gain in his or her purchase.
Real Estate Price Changes
According to the Greek Central Bank, the first half of 2010 saw Greek real estate prices fall about 6% in the Athens area, with a topple of more than 10% in prices of newly built condominium apartments in certain parts of the Athenian basin; areas such as Patisia, Menidi, Sepolia, Kallipoli, Metamorfosi, Nea Makri, Ilion, Neos Kosmos, and Dafni.
Will Prices Finally Drop?
Affluent areas such as Agia Paraskevi, Brillisia, and Marousi on the other hand, according to Triad Real Estate, experienced a 5% fall in newly-built condos, and in 20 or 30 year old flats, could reach a discount of 20 to 25%.
Prices Eventually Rise
What will happen in the future as far as Greek real estate prices go, is very unclear since the situation in the country, although improving, is still quite volatile. There will be ample opportunity for bargains for those that keep their eyes open and consult with qualified professionals and competent brokers, and there will be lost opportunities for those focusing in the wrong direction.
Regardless of which way the real estate market goes, one thing for certain is that prices will at some point pick up, since the amount of available property in Greece is, and will always be, limited.