Lost year for holiday homes

Lost year for holiday homes

This year appears to be a lost one for the holiday homes market, after sale prices had started climbing in 2019 and the first couple of months of this year.

Given the absence of the almost exclusive driver of that demand – i.e. buyers from abroad – it is clear 2020 will record a significantly lower volume of transactions even on the most popular islands. It remains to be seen how this will affect rates, as for the time being sellers have not shown any signs of lowering their asking prices.

According to the new Holiday Home Price Observatory by Geoaxis Property & Valuations Services, the average increase in sale prices in the first half of the year amounted to 1.6% above that of January-June 2019. The survey sampled five Cycladic islands: Mykonos, Santorini, Paros, Kea and Kythnos.

Compared to 2013, rates have fallen 10.3%, with Mykonos recording a 6.9% decline while Kythnos has seen the biggest drop, by 15.3%

The Geoaxis analysis notes that summer homes have shown significant stability, both during the period of decline and that of growth, in comparison with other property categories.

According to Yiannis Xylas, chief executive officer at Geoaxis, “in the coming months property prices will suffer pressure whose force will depend mainly on how long the existing special conditions persist for. The rate at which both foreign and domestic demand recovers will depend on how rapidly we return to normal.”

He adds that the uncertain tourism season unfolding in Greece, the possibility of a new wave of the coronavirus pandemic in the fall, and the (possibly favorable) impact of the support measures on the real economy will determine to a great extent the eventual effect that Covid-19 has on the property market.

Importantly, current sellers of holiday homes used to have the option of utilizing them through short-term rentals too, securing an income that discouraged them from selling their assets at low prices, in the hope of a rate hike. This summer that will not be an option, so asking prices may be about to drop.

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