Euro exit would see prices of residential property crumble
Property prices in Greece would suffer huge devaluation if the country were to leave the eurozone and revert to a national currency.
Market professionals say that at first the level of the devaluation would amount to that of the national currency compared with the euro. At a later stage, it is likely prices would decline further, given the negative financial conditions that would follow a Greek exit from the euro bloc.
Dimitris Manousakis, head of property consultancy Savills Hellas, says: “The market will practically find itself at zero point, having to restart all over again. In such a scenario, it is very likely that those who still enjoy liquidity, in euros or other strong currencies, foreigners or Greeks, will try to take advantage of the considerable drop in values. As a result, I expect that prices will fall significantly, but I am not so sure about a similar decline in demand.”
On the other hand, Manousakis says, the waiting period to sell properties will grow even further: “It will take owners forced to sell their assets several years before they attract buyers, especially if their property is not in a privileged area or has any drawbacks,” he adds.
Already the average waiting period to sell a property amounts to 12 months. In any case, the biggest impact would be on the residential market, particularly assets associated with a mortgage, as the drop in values would turn them into nonperforming loans for the banks.
As a result of the economic crisis and the lack of liquidity, prices dropped by 38 percent on average from end-2008 until the first quarter of this year. The decline in Athens and Thessaloniki has been even greater, averaging 40 and 42 percent respectively, according to the analysis of the Bank of Greece. The central bank notes that the drop in residential prices has been greater than those of offices.
A Greek eurozone exit would force many people to sell properties as personal finances would take a turn for the worse. Anyone with debts or loans would find it very hard to service them, especially if fears regarding the closure of many enterprises prove correct: Companies would try to survive first by cutting staff and selling assets that would also include real estate properties.
As for foreign buyers, Greece would become a particularly attractive market, says Theologos Bosdas, vice president of the Association of Chartered Surveyors (EPPA). This would not just be for institutional investors, but also private home buyers and anyone (including some Greeks from abroad) with cash in hand.
