Real estate market in state of despair

The plethora of new taxes that have hit the Greek real estate market as a result of the economic crisis and the state?s scramble to raise funds to replenish the empty state coffers have led the market to paralysis and homeowners to desperation, according to the annual conference of the Hellenic Property Federation (POMIDA), which took place last week.

At the center of the conference?s agenda was the proposal by Greece?s international creditors that so-called objective property values (used for tax purposes) be raised by 25 percent on average.

Alternate Finance Minister Pantelis Economou, who addressed the conference, said that the proposal is ?irrational,? and that ?no irrational measures will be adopted.?

Economou agreed with critics at the conference that real estate was already overly and irrationally burdened by taxes, though he said that any changes to property taxation should have a neutral fiscal effect, adding that changes are currently being made to the property tax law for 2010 so that it becomes fairer and less of a burden.

The president of POMIDA, Stratos Paradias, expressed the wish of the federation?s members to see the abolition of the property tax for 2011 that is levied through the annual tax return, given that homeowners have already paid an emergency property tax via their electricity bills for that year. He also asked for the unification of all capital taxes into one significantly lower charge that would factor in the revenue generated by the property and the owners? tax-paying capabilities.

Paradias warned that adoption of the proposal for a 25 percent average increase in objective property prices would be tantamount to robbing property owners blind and could cause the total collapse of the construction sector.

According to Paradias, raising objective prices at a time when selling prices have dropped and continue to drop dramatically will increase the debt burden of property owners by causing a rise in property taxes, municipal taxes, ownership transfer levies and the fee for protecting illegal buildings from demolition.