ECONOMY

Property prices expected to fall after Olympics

«What goes up must come down» seems an apt phrase for the stock market, but it is now becoming daily more appropriate for property prices. Most people have probably not noticed any difference in the prices quoted in the ads, indeed, these may have risen slightly; nevertheless, as real estate agents note, the final prices of current transactions are appreciably lower than those quoted. A number of market analysts are already forecasting a correction, or at least a slowdown, in price rises in the 2004-2006 period. But this is prediction hedged about with reservations, as there has never been a drop in realty prices in a city hosting Olympic Games. Property consultant Nikos Yiannoulelis forecast recently that prices may fall up to 30 percent during this period. The expensive houses in the northern suburbs of Athens are expected to sustain the greatest pressure, and western suburbs the least. On the other hand, neighborhoods in the center of Athens and the fast-growing Mesogeia area are projected to retain their dynamism. According to Yiannoulelis, new houses are overpriced, particularly in the so-called «good» areas, while older items appear undervalued. Apart from the high cost of land, which construction companies roll over to buyers, demand has also been high, though is now showing signs of subsiding. Indicative of the underpricing of older properties is the fact that perhaps the best investment today is the purchase of an old building and its renovation, which may yield a gain of up to 15 percent. The reason why their prices have fallen to today’s low levels is that the only interest shown is almost exclusively by economic migrants, whose disposable income on the whole is limited. Nevertheless, purchases of new properties have not started abating yet, despite the high prices, as many people have sold their old houses – perhaps to immigrants – and made up the required sum with low-rate mortgage loans. According to Yiannoulelis, this factor is expected to disappear after 2004, when the big projects in and around the Athens basin will come to an end and a large number of immigrant workers should be attracted further away from the capital by jobs in EU-subsidized large projects. Many people are also expected to move from developed to developing areas around the capital, such as Mesogeia and those served by the new suburban railway. Both factors should exercise a downward pressure on prices inside Athens. In the next five years, about 400,000 people, including immigrant workers, are expected to move further out. Particular factors contributing to a downward price trend will be the increased supply of the 4,000 apartments of the Olympic Village to working people and the auction of at least 10,000 homes as a result of an expected rise in the number of bad mortgage loans. An additional factor will be the anticipated fall in land prices, as new areas come into town plans.