House transactions in Greece grinding to a standstill in 2016

House transactions in Greece grinding to a standstill in 2016

The first couple of months of 2016 find residential property sales in even worse shape than last year when one takes into account the flow of funding from banks to the housing market, which fell 4.1 percent from the same period last year – when the annual decline had come to 1.6 percent.

According to the Bank of Greece, local lenders disbursed some 133.3 million euros for housing purposes in January and February 2016. This is a result of the reduced demand in the market as well as banks’ reluctance to increase loan issues or even to consent to the refinancing of existing loans before the picture regarding house repossessions and nonperforming loans becomes clearer.

Interestingly, business expectations in the construction sector improved in the first quarter of the year, according to a survey by the Foundation for Economic and Industrial Research (IOBE), as the index improved to 68 points from 58.8 points in the previous quarter, while in the first quarter of 2015 the index reading was 65 points. That rise is attributed to the significant improvement in private construction (89.1 points against just 46 in Q4 of 2015).

Last year saw a turnaround in the construction domain’s positive course recorded in 2014, when the construction output index had grown a remarkable 15.1 percent on an annual basis. The IOBE report showed that a drop of 2.4 percent was recorded in 2015, as the positive course observed in the first half of last year was fully reversed in the second. Still, the structural works output index rose 1.6 percent in 2015, having posted a marginal decline of 0.3 percent in 2014.

The number of building permits in Greece fell 1.6 percent last year from 2014, totaling 13,257 permits. Despite that reduction, both the surface area index and the volume index posted an annual increase in 2015, amounting to 7 percent and 27.8 percent respectively. This statistical disparity is explained by the launch of major construction projects last year, IOBE has noted.

In the first couple of months of 2016, total construction activity in Greece recorded a 15.1 percent decline in terms of permits from the same months in 2015. In terms of surface area, there was a 15.8 percent decrease, while the drop was only 1.4 percent for volume. In February alone there was a 1 percent rise in volume, according to provisional figures compiled by the Hellenic Statistical Authority (ELSTAT), probably thanks to tourism accommodation projects under way ahead of the 2016 tourism season.

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