Newly built house prices have fallen in most Athens districts since June 2006, a recent survey by realtors N. Giannoulelis & Partners has found. The report found that the decline ranged from 1.7 percent to 5.8 percent in 36 of the 61 areas surveyed, while prices remained stable in the rest. As a result, in many cases, the prices of a newly built apartment have returned to those of December 2005, eliminating the increases in the first half of the year. This has happened in the areas of Ambelokipi, Galatsi, Neos Cosmos, Vyronas, Kallithea, Patissia, Ekali, Kypseli and the upmarket central Athens neighborhood of Kolonaki. According to Giannoulelis, the declining trend in prices has been the result of belied developers’ expectations that as soon as discussion began on increasing the officially determined worth of homes for tax purposes as of January 1, 2007, buyers would hasten to purchase, thereby sending prices up. On the contrary, buyers seem to have kept their cool and prices are falling. Giannoulelis takes the view that the correction will continue for the next two years, «until the market returns to price levels justified by the fundamentals of the Greek economy.» The view gains credence with the fact that in no area have prices risen since June. The actual fall in prices is especially noticeable in the northern and northeastern suburbs, the broader Athens center and western suburbs. In contrast, prices have remained more or less stable in the southern suburbs and the Mesogeia district in central Attica, which has seen an explosion in housing construction in recent years. One factor expected to lead to a further decline until the end of the year is that many developers will be forced to sell at lower prices due to higher liquidity requirements. Due to the high levels that prices have reached, demand is not translated into transactions and many construction firms are cash-strapped. Rising investment Meanwhile, Alpha Bank predicts in a report that investment in new housing will rise by 10 percent this year and 6 percent in 2007. This is seen to be due to the large number of building licenses issued since mid-2005 and the continuing strong rise in mortgage loans (32.4 percent in July 2006). The report, appearing in the bank’s latest weekly economic bulletin, also says that «a significant reduction is expected in the last quarter of the year in the volume of licenses that will be issued, compared to the particularly high level in the year-earlier period. As a result, the total volume of building licenses that will be issued in 2006 is projected to be about 19.5 percent lower than last year.» However, «there is an intervening period of 10-18 months between the issuing of the license and the actuality of construction. As a result, a large increase in housing investment is projected both in 2006 and 2007,» the Alpha Bank report argues. It also notes that the expansion in building activity has been partly the result of demand from abroad.