Homes shrink as housing prices, loans rise

More Greeks today are buying apartments with help from the bank, but dwellings are often smaller and less attractive than older ones

By Dimitris Rigopoulos - Kathimerini

The latest rush of Greeks purchasing houses came last fall, when confirmation came that VAT would be charged on all property purchases after January 1, 2006.

Indeed, owning a home has always been the ultimate status symbol here. Over the past five years, that desire has reached epidemic levels because falling interest rates on housing loans have made a seemingly impossible dream more of a reality.

Housing loans assumed the role that the system of “antiparochi” (giving up one’s house to a developer in exchange for apartment space in the new building) did in the 1950s and 1960s.

According to the Bank of Greece, the number of housing loans granted in 2005 increased by 31.5 percent, up more than 4 percent from 2004. The volume of private construction activity (based on the number of building permits issued) rose last year by 32.4 percent, not including December, when construction was at fever pitch.

However, prices have risen along with demand.

Developers have faced a shortage of land and rising property prices. Large properties in nicer suburbs have been divided into half, ceilings lowered from 3.20 to 2.70 meters in order to add more floors, and apartment sizes reduced to fit a five-room apartment in space that once held four rooms — and at a higher price.

In 2000, one could find a 120-square-meter apartment for 200,000 euros; today, it’s hard to find a 100-square-meter home for that price.

Improved technical specifications for new apartments (such as anti-seismic protection, parking space, more luxury fittings and storage space) do not mean much in the big picture.

Homeowners may have gained a fireplace or a burglar alarm but they have lost other things — front gardens sacrificed for garage ramps or smaller bedrooms for children — that have reduced their quality of life.

Kathimerini talked to architects and town planners about their views on the property market in order to get a sense of what new homes are like in modern-day Athens.