Large supply of housing does little for prices

When you search for a house to buy, your first criterion is usually how much money you can spend, with your needs and desires taking a back seat. Often, it is difficult to reconcile all these things and you have to compromise. Someone thinking rationally could advise you to look at locations where supply is heaviest. Economic theory, after all, tells us that supply is one of the biggest factors influencing price and the greater the supply is relative to demand, the lower the price. If you think that, using this rule, you can buy a house in Athens, think again. According to data reflecting supply and prices in June 2003, the 10 areas with the greatest supply of new housing show inflated, sometimes even absurd, prices. Topping the list is the seaside suburb of Glyfada. The intense building activity there has led to the availability of 865 houses or apartments for sale in June 2003, down from 936 in June 2002. The median price per square meter is 2,310 euros and 2,480 euros for new buildings. In some cases, prices rise to 4,400 euros per square meter. Real estate professionals active in the area admit that, although Glyfada is one of the more attractive places in metropolitan Athens to live in and transport is expected to improve in the near future, with the arrival of the tramway and, a few years later, the metro, it is still overpriced. Some owners or builders eager to sell now may be forced to lower their demands. The same holds true for Palaio Faliron, Kalamaki and Voula, which are fourth, eighth, and 10th, respectively, among high-supply areas. Second and third in supply are Kallithea and Nea Smyrni. These two, and adjoining markets, show many similarities, given the explosion in development over the past three years. In both areas, the would-be buyer will find inflated prices. In Kallithea, an area with good transport connections, the dense building provides a large number of houses, but the rather high average age of the buildings reduces the average value of apartments for sale to 1,440 euros per square meter. In Nea Smyrni, which, like Kallithea, has the advantage of being close both to the sea and central Athens, new apartments go for about 2,055 euros per square meter. However, supply more than makes up for demand and this creates the conditions for a drop in prices. Another overvalued area is Maroussi, where some owners and developers have built up excessive expectations over its proximity to the Olympic Stadium. For example, a 35-square-meter studio near the train station is being offered for 750 euros’ rent per month. Average asking prices for apartments for sale are 2,350 euros per square meter. The top 10 high-supply areas are completed by Halandri, Kypseli and Ilioupolis.