With the property market having remained deep in hibernation since the start of the year due to confusion over the capital gains tax, which has led to an inability to complete even the few property transfers that were to take place, sector professionals are unable to point to any positive developments that might stop the price slide this year.
The constant interventions, mostly in the form of taxation, have been discouraging even those who in the last few months had been considering buying a house or apartment in view of the attractive prices, mainly from private sellers. Worse still, sector professionals are now saying that more and more people appear to hold the view that properties, just like cars, are now a permanent source of state revenues to meet the fiscal targets.
This was also implied in a document forwarded to Parliament by Finance Minister Yannis Stournaras this week: Referring to the reasons why the government has not adjusted properties’ so-called objective values (used for tax purposes), to get closer to the actual market rates, he said it is not possible for the time being because the very low number of transactions actually taking place does not allow for the determination of true market rates.
Stournaras added that “as soon as conditions allow for it, the issue of reforming the system to calculate properties’ objective value will be examined, based on availability, proportionality and social and economic criteria, also taking into account the fiscal strength of the state.” It was this last part of the statement that was most revealing, as any revision of objective values that does take place in the future will depend on what the state can afford. It is clear that any reduction in objective values would automatically entail fewer revenues from the Single Property Tax.
However the situation in the market is continuing to deteriorate. According to estate agents’ data presented at the Hellenic Valuation Institute’s annual conference a few days ago, the spread between market rates and objective values has continued to grow following the 20 percent decline in prices in Athens and its northern suburbs in 2013 compared with the year before. For instance, in Kypseli, just north of the city center, the rates of older apartments range between 300 and 400 euros per square meter, while the minimum objective value for the neighborhood stands at 900 euros/sq.m. This represents a difference of as much as 70 percent. Newly built apartments in Kypseli sell for 1,000 euros/sq.m., against an objective value of 1,500 euros/sq.m. – i.e. 50 percent more.
In the center of Athens, the market rates for newly built houses are between 3 and 33 percent lower than the objective values, depending on the area, while older houses see a spread that ranges between 20 and 70 percent. In the capital’s northern suburbs, market prices for older apartments lag objective values by 3.5 to 60 percent, depending on the location, while the going rates for new houses are either just above their objective values or down by up to 15 percent.
According to data presented at the same conference by Alpha Astika Akinita, houses in the western and eastern suburbs of Athens have also suffered a major price decline in recent years: This amounted to a total of 22.7 percent in the western suburbs from 2008 to 2013 and to 25 percent in the eastern suburbs during the same period.