House price boom spread to other Greek cities in ’05

The prices of homes outside Athens may remain lower than those in the capital, but last year they rose at an even faster clip than did Athenian real estate. The artificial demand created by consumers’ fear ahead of an increase in the official values used for taxation purposes and changes in property tax led to price rises in major cities averaging 10 percent. This year the dominant view by market professional across the country is that demand will decline compared to last year, which is hardly a surprise given that 2005 was not an ordinary year for the market. The lower demand, however, is not expected to push the prices of newly built houses to lower levels, though the scope for further significant rises seems to be disappearing. Cities outside Athens are now seeing an average sale price of between 1,700 and 1,800 euros per square meter for newly built flats, while the rise in the number of maisonettes is remarkable, particularly in new areas created as they enter town planning zones. Thessaloniki The Thessaloniki house market has shown some striking similarities with that of Athens, as a significant number of households have been affected by the anticipated changes in taxation in order to move ahead with the purchase of a home. At the center of the increased demand were, as expected, newly built flats, particularly on the east of the city, resulting in prices strengthening by 10 percent on average. «Last year was not a normal one for the housing market as artificial demand was created for reasons that we all know. The areas that stand out are those in the eastern parts of the city and within the city limits, areas such as Harilaou, Kalamaria or Toumba,» notes Nikos Manomenidis, the head of the estate agents’ association in Thessaloniki. According to him, the average sale price per sq.m. for newly built flats now ranges between 2,000 and 2,100 euros. Nevertheless a similar rise in prices and demand has been noted for older houses as well. Manomenidis even believes that demand for older homes will keep rising as time goes by, mainly thanks to their lower prices. Anyone wishing to find a relatively economical choice in the housing market of Thessaloniki should head to the western entry point of the city, particularly Kordelio or Monastiri, where the price of a sq.m. is about 1,500 euros. Iraklion The housing market in Crete’s capital could not have been an exception in the property market frenzy of last year. Demand rose considerably and according to the president of the estate agents of Iraklion and Eastern Crete, Artemis Mavraki, the volume of contracts increased by 30 percent compared with 2004. Similarly, the sale prices of newly built flats rose by 25 percent year-on-year, as a result of the strong demand, especially in areas that recently entered town planning zones. Particularly high is the demand today for Ai-Yiannis, Therissos, Koroni Magara and Kipoupolis, where prices range between 2,100 and 3,000 euros/sq.m. depending on location and quality of construction. Patras «The rises in the prices of newly built flats in the city of Patras, Greece’s third-largest city, ranged between 5 percent and 10 percent depending on the area and the quality of construction,» says Constantinos Kapitsanos, an agent in the capital of the Peloponnese and the vice president of the Greek branch of the International Real Estate Federation FIABCI. «I would consider that rise rather limited when seen in the light of the scaremongering that took place in the property market last year, which instilled the fear that from early 2006 the newly built house market would become a distant dream for the average Greek,» he stresses. Today, the average sale price of newly built flats in Patras is estimated at 1,800 euros/sq.m., with demand being evenly spread throughout the city. Those standing out are in the city center, particularly the Psilalonia and Aghia Sophia areas, as well as in the northern, coastal part. The area of Aroi is growing rapidly, thanks to its view from atop a high spot, an asset that always costs more. Pelecanos is another area where the going rate exceeds 2,000 euros/sq.m. in some cases for newly built flats. Cheaper options can be found at Zarouchleika, a former working-class area of Patras, and at Aghia Triada.