BUSINESS

In reality, property prices are far below objective values

By Nikos Roussanoglou

The gap between the so-called “objective” property values used for tax purposes and actual market prices is widening by the day, increasing the unfair burden on owners who shudder at the thought that they will again be taxed according to 2007 values, which had changed little compared to 2004, when the economic reality in this country was very different.

Property owners are therefore effectively taxed on the objective values set when the market had reached its peak and banks had focused their strategy on the expansion of housing credit with offers and promotional programs to lure more clients.

In areas such as Vouliagmeni, Palaio Psychico, Maroussi and Iraklio in Attica, the current market prices are over 30 percent lower than the objective values, with the gap for Psychico and Vouliagmeni standing at over 50 percent. For instance, the average objective value in Palaio Psychico is 7,250 euros per square meter, when houses there are currently selling at a rate of around 3,000 euros/sq.m. – i.e. 58.5 percent lower.

The phenomenon of market prices sliding below objective values started about 18 months ago, mostly affecting pricey areas. The Athenian suburbs of Ekali, Voula and Kifissia were some of the first areas to see transactions below the value used for tax purposes. Nowadays this is the rule and not the exception. As the crisis deepened and prices dropped, this trend spread to medium-priced areas such as Palaio Faliro, Halandri, Maroussi, Glyfada and Iraklio. It has now reached even cheaper areas such as Moschato, Kallithea and Galatsi.

Bank of Greece data show that by the end of the year market prices will have posted a 40 percent average decline compared with end-2008, while banks have practically stopped issuing loans until they sort out their nonperforming ones.

“Much as it may not be in the state’s interest concerning tax revenues, objective values will have to be revised lower, as this is the only way to correct the market and allow for expectations of a new start,” says Lefteris Potamianos, the vice president of the Athens-Attica Estate Agents’ Association.

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