Greek real estate becomes more affordable
Real estate prices in Greece fell by 19.8% from the third quarter of 2008 to the first quarter of 2012, according to Eurobank statistics. In 2008, the cost per square meter of housing in Greece was at its highest; now it has dropped to the 2005 level. Old apartments have seen the biggest price drops.
“Since 2008, real estate prices in Greece have fallen by 20%, although the Greeks themselves deny this in official statistics. In reality, the situation is even worse – after the seller quotes a price, you can demand an additional 5-15% discount,” says Stanislav Zingel, president of the international real estate agency Gordon Rock.
Our compatriots, who are attracted by Greek resorts, are not at all concerned about the drop in housing prices. Except for those owners who bought apartments and houses before 2008 – their properties have significantly depreciated now. “Russians are not frightened by the problems in this country. Lately, they have become more interested in Greek real estate, which has greatly fallen in price since the start of the crisis in 2009,” says Olga Ovchinnikova, an analyst at the portal Tranio.Ru.
Overall, you can consider buying property in Greece even with just 50 thousand euros. “Now buyers are focused on purchasing only cheap real estate – on average 80-200 thousand euros. Those who plan to buy expensive real estate, starting from 1 million, prefer to do so in other countries. Such buyers fear uncertainty in the Greek real estate market and invest money in more stable markets,” explains Stanislav Zingel.
According to RentSale, traditionally the most popular real estate among Russians is located on the Halkidiki peninsula (on Kassandra and Sithonia) and on the island of Crete. “On the mainland, prices are significantly lower than on the islands. For example, a one-bedroom apartment on Sithonia, 150 m from the sea with a sea view, can be bought for 45 thousand. A townhouse 50 m from the sea – for 70-80 thousand euros.
A standalone house (area 140 sq.m, plot about 20 ares) 400 m from the sea and 1 km from the town center – for 130-140 thousand euros. On Crete, of course, prices are higher. Prices for decent apartments start from 80 thousand, townhouses from 150 thousand, and standalone houses from 300 thousand euros. At such famous resorts as Elounda and its surroundings, prices are several times higher,” says Vera Mochalova, an expert at the foreign real estate department of RentSale. For example, on the site Hellenic-realty.com in Corinth (Peloponnese), apartments of 50 sq.m in good condition, with furniture and near the sea, are offered for 70 thousand euros. In Arcadia (Peloponnese), two-room apartments with a terrace and sea view are offered for 95 thousand.
On the site Greekpropertyexchange.com, a plot of about 300 sq.m on Crete can be bought for 40 thousand euros. A separate house can be found from 120 thousand. For example, it could be a two-story house in Chania (Crete), area about 70 sq.m, plot 250 sq.m, 4 km from the beach. The house is located in an organized settlement with two communal pools.
“The Cretan real estate market has the strongest positions. Being the largest island of Greece (comparable in size and population to Cyprus), it has a local economy that is relatively independent of the mainland. Consequently, all the problems of the ‘mainland’ have not affected it as much. The popularity of Cretan real estate among foreign buyers will grow, and prices will remain stable. Developers, in turn, will not start new projects and will try to sell what they have already built,” says Tatyana Nikishina, director of foreign real estate sales at Moscow Sotheby's International Realty.
In the future, the decline in real estate prices in Greece will continue. According to estimates by the rating agency Fitch, Greek real estate prices will fall by 17% in the next two years. Thus, the total decline since 2009 will be 37%. Fitch bases its assumptions on the expectation that the economic situation in the country should improve by 2014. If this does not happen, the price drop will be even greater.
Regardless of the future situation in Greece – whether it leaves the Eurozone or not – the price drop is inevitable. “If Greece leaves the Eurozone, it will return to its own currency, the exchange rate of which will likely be low. Then buyers who invested money in local real estate may lose part of their funds – even up to 80% of its value. However, real estate prices in local currency may immediately rise by 30-40%. And then increase by 10-15% per year due to demand from buyers who previously could not afford to buy a house or apartment in Greece.
If Greece does not leave the Eurozone, real estate prices will still fall – for at least three years. The price drop will be at least 50% of current levels,” says Igor Indriksons, head of the consulting portal Indriksons.ru.
According to Stanislav Zingel, “if Greece leaves the European Union, there will be devaluation of the local currency, many developers will close their projects, and the market will be highly volatile.” “New offers at low prices will appear – sellers will be forced to sell their properties due to financial difficulties. However, this trend will not be massive and will not last long. Overall, due to currency risks in such a situation, real estate prices could drop by 10-20%,” Stanislav Zingel believes.
Although some experts are confident that Greek real estate prices have already reached their minimum. 'Never before could one compare the cost of real estate in Greece with that in Bulgaria, for example. After all, these are completely different levels – both in development, climate, ecology, and there is no comparison when it comes to the sea either. If sellers have to lower prices even a little, then developers will simply find it unprofitable to build new properties, because everyone wants to make some profit, not just recover the cost of land and construction. In this case, in a few years there will be a 'seller's market,' because there will be very few properties for sale, and then sellers, not buyers as now, will dictate their terms. But I don't think that is a question of the near future,' believes Vera Mochalova.
When buying real estate in Greek resorts, it is worth remembering a few rules. Previously, to buy real estate in Greece, Europeans needed to obtain a residence permit in the country, and Russians needed permits from the Ministry of Defense – if it was about border areas. Now this requirement has been abolished.
'Since June 2011, Russian citizens can purchase real estate in the border areas of Greece, previously restricted for sale to foreigners, without obtaining permission from the country's Ministry of Defense. In addition, permission to purchase real estate in these areas will be issued to Russians by local authorities.'
'The entire purchase process now goes faster, whereas earlier it took more than half a year. With the introduction of the law, the list of restricted areas was reduced, and the most popular areas for Russians were excluded from it – the island of Crete, Thessaloniki, Corfu, Halkidiki, Kefalonia, Grevena, Kozani, Imathia, Pieria, and Kavala,' says Tatiana Nikishina.
According to the portal Tranio.Ru, a foreign buyer pays a transfer tax, a municipal tax, and a registration tax. When purchasing land and housing (if the construction permit was issued before January 1, 2006), the transfer tax is 8% of the first €20,000 and 10% of the remaining amount. When purchasing a property built later, the tax is 23% for mainland Greece and Crete, and 16% for the other islands. The municipal tax is 3% of the transfer tax. The registration tax is about 0.5% of the property value plus €15.
There are other requirements. 'Since January 10, 2011, owners of houses with an area of 50 sq m or more, in the case of sale or rental, must have an energy efficiency certificate. The certificates are issued by inspectors of the electric company after a preliminary check of electrical appliances and meters,' explains Tatiana Nikishina.
Yulia POGORELOVA.
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