ECONOMY

House prices expected to drop this year

This year will witness an end to the property market’s frenzied growth of the previous three years, experts agree. There were signs of a slackening pace in the final months of 2002, as the number of mortgages provided declined; so did the prices of new houses. According to Giorgos Leoussis, a top manager at Alpha Urban Properties, the number of mortgages declined in 2002, compared to 2001, despite the fact that tax reforms announced in the fall fueled expectations of a significant growth. «There was, indeed, some growth in applications for mortgage loans in the last quarter, but not to the extent hoped for by credit institutions,» said Leoussis. Beginning this year, there will be fewer tax deductions from those taking out a mortgage loan. This is expected to hurt loan applications to some extent. «Those who have decided to buy a house will do so without second thoughts,» a real estate broker said hopefully. Prices of new houses are expected to either stay unchanged or decline in 2003. This price deflation, already apparent in richer Athens suburbs, such as Psychico, Kifissia and Glyfada, will extend throughout the market. In fact, the trend has just begun to affect solid middle-class suburbs like Halandri, Aghia Paraskevi and Maroussi – near the Olympic Stadium. A market source told Kathimerini that construction companies were obliged to roll back their prices, fearing that many of the apartments would find no takers. (In Greece, the vast majority of the housing market is controlled by small companies, which build one or two apartment blocks per year. These are the least likely to afford empty spaces. The biggest construction companies are involved in big, publicly funded infrastructure projects.) In areas where new apartments were going for about 2,930 euros per square meter, prices have fallen to about 2,640 euros per square meter. Construction firms are reassured by the fact that the prices of land plots have also started going down but are concerned over labor costs; even immigrants, which have largely displaced Greek construction workers, have been established long enough to command higher wages.