Coming fast on the rebound of apartments on Athens’ southern coast and the city center, and luxury villas on the islands Cyclades, winter holiday homes have also entered a recovery course, having been among the first real estate categories to suffer from the financial crisis and see a protracted flatline in demand that lasted until 2017 at least.
As 2019 draws to a close, the annual survey by Geoaxis Property & Valuations Services shows that home sale prices at selected winter holidays destinations have recorded an average annual increase of 8 percent, which is the biggest since 2008.
Geoaxis has found a general rise in prices across all of the areas surveyed. The biggest hike, amounting to 9.6 percent year-on-year, is seen in Trikala in the Peloponnese, a mountain village near Corinth that in recent years has evolved into a very popular destination for Athenians, thanks to its proximity to the capital.
Equally dynamic is central Greece’s Arachova near Delphi – the broader area is traditionally one of the country’s most important winter destinations – which enjoyed a rise of 9.5 percent. Karpenisi, also in central Greece, posted an annual rise of 8.5 percent, while Aghios Athanasios in Pella, Central Macedonia, saw a 4 percent price increase.
The survey further shows that the average surface area of the winter holiday homes on sale came to 171 square meters and their average age stood at 11 years, which is exactly the length of the crisis in this market. Consequently they are properties that had just been built when the financial crisis broke out and remained unsold despite the nosedive in prices.
According to the head of Geoaxis, Yiannis Xylas, “the increase in the last 12 months reflects the consolidation of the return to financial and political normality, the expectation for a market recovery with future capital gains, the strengthening of winter tourism activity and the start of gradual access to easier borrowing.” Last year was the first since the outbreak of the crisis when winter holiday homes rates stopped dropping and recorded their first – albeit marginal – growth since 2008 by 0.7 percent. It followed an overall decline that in some areas had come to 62 percent.
One or two years of some growth will obviously not suffice to change the picture that the decade-long crisis has created in this property category. Even today the Geoaxis survey shows that prices are less than half (down by 50.5 percent) from the peak they had reached in 2008.
The biggest decline, of 62 percent, has been recorded in Aghios Athanasios, as asking prices today average at 1,240 euros per sq.m., against 3,300 euros/sq.m. In Arachova rates now come to 1,425 euros/sq.m., from 3,000 euros/sq.m. a decade earlier, a decline of 53 percent. The drop is smaller in Trikala Corinthias, where rates come to 1,255 euros/sq.m., against 2,250 euros/sq.m. in 2008, while at Karpenisi there has been a 43 percent fall, from 2,310 euros/sq.m. to 1,325 euros/sq.m.
As Xylas points out, despite the price increase over the last couple of years, there still are may constructors who have invested in this particular niche market by taking out loans so as to build luxury chalet-like homes, with the cost of construction and land acquisition topping 1,500 euros/sq.m., far above the current average rates. These professionals therefore remain trapped as even selling below cost appears able to generate the demand they need. “Such is the picture at Livadi in Arachova, where after the construction frenzy – to the point of some maisonettes being built almost in the lake – dozens of complexes remain incomplete without any prospect of an immediate sale.”
Indeed this market is a typical example of excessive expectations cultivated in the decade before the crisis, when the area of Arachova had been dubbed “winter Mykonos.” It attracted the Greek jet set, the rich and famous every winter, at a time when owning a mountain “chalet” was proof of prestige and wealth, along with a holiday home on Mykonos or Santorini.
That trend was evident from the size of the properties constructed in or near Arachova in their hundreds every year, as most of them exceeded 250-300 sq.m. Therefore. from 2002 to end-2005 sales prices in the area of Arachova went up by up to 100 percent in some spots, both for buildings and for plots. Properties closer to the Parnassos ski resort had become even more expensive; demand was so high that for some years buyers would acquire plots outside the town plan with the aim of constructing and selling three maisonettes so as to offset the cost of a fourth one, which they would keep for themselves.
Many buyers of the previous decade now have assets in the area and hardly any prospects of seeing their investment bear fruit anytime soon.
This picture could change if the recent steps the government has taken toward reducing taxation and easier access to cheaper funding bring results. Along with the further normalization of the economy and the strengthening of the winter tourism product in Greece – which lags summer demand considerably – those factors could accelerate the absorption of the above properties, while also increasing prices.
Xylas argues that the market’s real recovery remains some time away, as at least three years, or even five, are thought to be needed for demand to return to a sustainable level. This is due to the way this particular market operates, as it trails developments in other property categories: First will be the consolidation in price growth in city apartments, stores, offices and warehouses, and then more specific categories like winter holiday homes will follow.