ECONOMY

Holiday home market has no choice but to cut prices

There are some real bargains out there for people thinking of buying a holiday home in Greece, as a third consecutive slump year with little interest on the part of local or foreign potential buyers has compelled owners, as well as construction companies, to introduce generous discounts.

It is estimated that over the past two years, prices for newly constructed holiday homes have dipped on average by 30 percent, with the greatest drop noted last year, when it became apparent to sellers that demand was going to remain low after seeing sales drop to even lower levels than in 2009.

So far this year the market has seen a further decrease in prices by up to 15 percent, a figure that is estimated to even out to an average of 10 percent by the end of 2011. Taken together with the decrease in prices from previous years, the overall average cost of a holiday home in Greece has dropped by nearly 40 percent in comparison to the summer of 2008.

Nevertheless, according to experts, sales remain at low levels due to the economic crisis, which has made buyers skeptical of investing in what they consider luxuries. With Greek buyers appearing to have turned their backs on the holiday home market, it seems however that buyers from overseas aren?t likely to make up the difference given that over the past decade no more than 3,000-4,000 holiday homes have been sold to foreigners. While potential buyers from abroad have increased in number over the past couple of years (especially this one), they don?t seem quite ready to invest as the Greek market does not offer the abundance of choices they are looking for. Even in special cases like the popular islands of Myconos and Corfu, where there are luxury villas going for up to 45 percent less this year than in 2009, there is little buying interest from abroad. The reason for this, according to experts, is competition from similar markets in southern European destinations such as Spain and Portugal, as well as Turkey.

The former two have been suffering the effects of the crisis for longer than Greece, meaning that their holiday home markets have been discounting prices for longer, and they also offer an overall higher-quality product.

For the Greek holiday home market to begin experiencing any benefits from the crisis, it will have to drop the prices even further so that they are competitive vis-a-vis the three major destinations mentioned above.

According to Savvas Savvaidis, director of the firm Savvaidis