ECONOMY

Housing recovery seen in mid-10

Residential housing construction activity is expected to recover in the second half of next year, supported by an environment of low interest rates and a moderate decline in prices, according to a report issued yesterday by the country’s largest bank. National Bank’s research department said in a report that the stock of unsold newly built homes has reached 137,000 units but that this is expected to be absorbed by mid-2010. «The main drivers are favorable effects from low interest rates and a moderate decline in prices, which overcome the drag on housing demand from low disposable income growth and deteriorating demographic trends,» the report said. Investment activity in the construction sector, which accounts for approximately 7 percent of the country’s annual economic output, has fallen sharply as credit expansion slows and consumers put off buying new homes due to the international economic downturn. Construction activity, measured by the number of new building permits, fell by an annual pace of 15.1 percent in February, versus 22.5 percent in January, reflecting Greece’s slowing economy. National Bank said housing prices in Greece are proving «remarkably» more resilient than in other European Union countries. Housing valuations in Spain and Ireland have fallen 9.5 percent and 16 percent, respectively, from their peaks in 2007, while average annual price growth in Greece remained marginally positive until the fourth quarter of 2008, according to the bank. «(Prices) are estimated to have declined only slightly in the first three months of 2009,» the bank said. On the labor font, however, the forecast is grim. The construction sector’s workforce is seen as declining to 7.5 percent of total employment in 2010, from 8.9 percent in 2007, National added. [email protected]