ECONOMY

Housing market likely to remain subdued in 2005

Weak demand and declining prices currently appear to be the main characteristics of the housing market in the Athens area. However, the relative lack of land on which to build, which is also the case in the suburbs, is expected to counterbalance the trend and slow down the fall in prices, according to a report by international realty consultants CB Richard Ellis, represented in Greece by Danos & Partners. The study also notes that the supply of a significant number of apartments in organized housing complexes that were used as media villages during the Olympic Games adds a new factor to the market, as this is a new factor in the Greek market whose success remains to be proved. «This is the first time that the Greek market is being called upon to absorb organized housing developments of such a scale and, therefore, no one can predict the reaction of buyers. Without a doubt, the developers will have to present housing and services of high quality at competitive prices in order to overcome the difficulties accompanying the entry into the market of organized complexes,» says the report. According to Danos & Partners officials, it is too early to gauge the impact of the Olympic Games on the realty market, particularly the housing segment. «The effect of the Olympics on the economy in general will largely determine developments in the realty sector. At the initial phase, anyhow, the successful staging of the Games has a positive influence on the psychology of the economy and this is important,» says the firm’s CEO, Yiannis Paraskevopoulos. According to the report, the demand for housing and prices are showing significant differentiations according to area, with those nearer to Olympic installations attracting the strongest interest. The new infrastructures, particularly the expanding tram and metro networks, are bringing about important changes in the map of the housing market; demand for new housing is strongest in Maroussi, Faliron and Hellenikon, where prices have not fallen or are rising. «In the 2001-2003 period, when house prices rose by 17.6 percent, 16.2 percent and 4 percent respectively, the interest of buyers and builders was focused on the areas around the Attiki Odos highway. Today, attention seems to be shifting to the city’s coastal front, where extensive reclamation projects have taken place and access has improved markedly,» says the report. It predicts a further decline in demand in 2005 due to the expected rise in interest rates and the value of the euro. The slowdown in the growth of mortgages in 2003 and the continuing downturn in construction activity this year point in this direction.