ECONOMY

Athens among leaders in Q2 decline of house prices

Greek home prices recorded the third-steepest fall among 39 countries in the second quarter of the year, a study shows.

According to a report in the Global Property Guide — which focused on the 39 countries which had released data for the period at the time — average house prices in Athens were 9.9 percent lower in Q2 compared to a year earlier, behind those of Ireland (-14.84 percent) and Bulgaria (-10.65 percent).

The basic conclusion of the report is that global property prices came under increasing pressure in the second quarter of 2011, mainly in Europe and the US. Of the 39 countries, only in 13 did prices post a rise, while of the remaining 26, the pace of easing accelerated in 18. In Spain the decline was 8.43 percent and in Croatia 6.55 percent.

According to Bank of Greece data for the second quarter, apartment prices were on average 4.5 percent lower than a year earlier. This was on top of consecutive declines of 4.7 percent in 2010 and 3.7 percent in 2009.

Data collected by business research company ICAP show that prices of newly built homes declined by 4-9 percent in the first half of the year. Analysts and market experts have argued however that the present price levels are in no way justified by the fundamentals of the Greek economy and its property market.

An analysis of the central bank data by geographical area shows that in the second quarter apartment prices were 6.7 percent lower in Athens year-on-year, 4.7 percent in Thessaloniki, 3.5 percent in other large cities and 1 percent in the rest of the country. The respective rates of decline in the same period of 2010 were 3.2 percent, 7.4 percent, 5.3 percent and 5.8 percent.

The decline this year was steeper for older houses (-5.5 percent) than for new ones (3 percent), in line with developments seen in the previous two years.

The market slump is perhaps best described by the number of transactions, which fell from 12,400 in the first quarter to 11,400 in the second. These figures point to a crash from the first half of 2010, when they totaled 74,400 (virtually the same as in 2009, when they had declined 35.7 percent from 2008). In addition, the properties sold in the second quarter were on average 36 square meters smaller compared to a year earlier.

Meanwhile, wealthy Europeans appear to be back in the holiday home market. According to global property company Quintessentially Estates, moneyed European buyers — especially the Germans, Norwegians and Dutch — are actively looking to purchase holiday residences abroad, though British and American buyers are largely absent due to the global economic uncertainty. Since 2007, this particular market had been dominated by Middle Eastern and Asian buyers. According to Quintessentially Estates, the number of prospecting orders placed with the company has risen by 50 percent. Company analysts point to investors turning to safer investment havens following the recent turmoil in global capital markets, especially after the downgrading of US long-term sovereign credit by Standard