Investment in the construction of new houses in Greece contracted by 95 percent from 2007 to the end of June, while the drop in private construction activity from 2005 to end-June came to 93 percent based on surface area, Bank of Greece data have shown.
The so-called “engine” of the economy, which steamed ahead from 1997 up to 2008 thanks to expectations from Greece’s eurozone accession, construction for the Olympic Games, a drop in interest rates and the liberalization of the mortgage market led to bubble the in real estate market.
The impact is now obvious in bad mortgage loans that would have been far fewer had the crisis not be as long and severe.
House prices in Athens and Thessaloniki have shrunk 45 percent since 2008, and across Greece by 41.5 percent.
Quality office and store spaces are almost 30 percent cheaper since early 2010, while older commercial spaces saw rates drop an average of 45-50 percent.
Worse, market professionals see no silver lining yet, with estimates saying prices will keep falling through end-2017 – there is some prospect of them stabilizing in 2018 (although such a hope had also been expressed in 2014 for 2016) – with ELSTAT figures showing construction activity declined 21.7 percent on surface terms in the first half of the year compared to 2015.