Why are so many newly built houses for sale in the capital?
The burst of the stock market bubble in 2000-2001 brought an end to the sudden and unexpected social rise of several investors. A little later the phenomenon of property and luxury-car confiscation culminated, as their owners were unable to pay for them, let alone maintain them. Luxury home sales The consequences of high expectations and enthusiasm have become very evident in the real estate market with professionals in the sector pointing to the high number of ads for the sale of luxury mansions in areas such as Palaio Psychico or Filothei. This is attributed to investors who had targeted those areas and are now unable to meet their obligations. More and more sector professionals stress that an increasing number of households resell the property they acquired as recently as one or two years ago because they cannot manage the mortgages. So before they face the specter of their house getting auctioned they sell it to repay their current loan and buy another house at a lower cost and with better borrowing terms. A recent survey by Aspis Real Estate on sales made last year through its network of estate agencies confirms that trend. The company’s CEO, Miltiades Epithymiadis, suggests that «many apartments are changing hands even if they were only bought a couple of years ago. This phenomenon is mainly recorded in the northern and eastern areas of Attica, i.e. the suburbs for medium and high incomes.» The selling trend began in mid-2003, but especially grew last year, possibly due to the new property tax measures imposed this year and the rising interest rates, as a great number of mortgages have floating interest rates. Capital gains In some cases the owner may even be a net gainer, particularly if he or she is among those who managed to sell their houses in the last quarter of 2005. In this period there was a boom in the property market as demand reached its peak, pushing prices to even higher levels. If, for instance, an owner acquired his house in 2003, it is almost certain he will have reaped capital gains. The profit from the sale may have allowed him not only to repay the mortgage that he would have struggled to do otherwise, but also to proceed to the purchase of another smaller house in a less expensive area. If his finances did not allow him to buy a new house then he may have rented an apartment. The shortage in demand for big apartments (in excess of 100 square meters) in many areas in the capital has pushed prices lower in the last year, which may actually work in his favor. Another reason relatively new houses are resold, after five years for example, is their landlords’ effort to cash in on the capital gains of their houses. Within 2005, newly built house prices rose by 20 to 30 percent on average. About 30 percent of owners selling within four years of acquiring a house do so to reap capital gains, while the majority (70 percent) sell their homes due to financial problems, say estate agents.
