House prices set for a decline of some 15 pct

Prices in the residential property market are expected to fall by 15 percent this year, while the decline could prove even greater if the country?s financial situation worsens. Based on the level of transactions carried out in the market in 2011 (defined as one of the worst years for the sector) the prices of old and new properties suffered a decrease of about 20 to 30 percent, market experts say.

According to Lefteris Potamianos, owner of the Search And Find agency, as well as treasurer of the Attica and Athens real estate agents association, the price drop concerns transactions carried out through real estate agents? and buyers? negotiations.

?While the asking prices were about 10 to 15 percent lower compared to previous years, the end prices were often lowered by another 10 percent following negotiation,? noted Potamianos. Nevertheless, according to the real estate agency owner, the most important decline was recorded in relation to older properties, where in a number of cases the financial needs of those selling was the driving force behind the transaction.

On the opposite end of the market spectrum, transactions regarding newly built properties developed by constructions firms were minimal last year, even though most construction companies, especially in the fourth trimester, showed some conciliatory signs by lowering their initial demands.

On the whole, however, it is estimated that total transactions across the country decreased by 50 percent compared to the previous year, as a result of buyer hesitation, lower spending power and banks refusing to administer mortgage loans — the latter in stark contrast to practices observed in previous years.

The above factors are not expected to show any signs of changing this year, given that the coming weeks are expected to be crucial in terms of the country?s economic fate. In the case of a positive outcome, there could be a stabilization of prices starting in the second half of 2012, although even this scenario seems more like wishful thinking than a realistic prospect. In any case, prices are expected to drop in the first half, reaching 10 to 15 percent less compared to 2011.

As a result, prospective buyers will have the opportunity to buy residential properties at considerably lower prices compared to 2008.

However, as market professionals such as CBRE Atria managing director Yiannis Perrotis point out, the taxation initiatives undertaken by the country?s Finance Ministry have dealt a heavy blow to the real estate market. ?It is inconceivable that in this particularly negative climate, both in terms of the economy and the real estate sector, there is talk of increasing the property values used for tax purposes,? he said.

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