Drop in home prices accelerates

Residential property prices began to fall faster in the second quarter of the year, with the recession putting the brakes on the number of deals taking place in the sector, data showed yesterday. Bank of Greece (BoG) figures – compiled by lenders – show that housing prices fell 5.7 percent year-on-year, increasing from a drop of 1.8 percent in the first quarter and a 4 percent drop in the last three months of 2009. The average price of new homes, up to five years old, dropped 6.3 percent, while that of older properties proved to be more resilient, retreating 5.3 percent. «A breakdown based on geographical region for the second quarter shows that apartment prices in Athens fell by 3 percent, 6.3 percent in Thessaloniki, 5.4 percent in other large cities and 10.9 percent in the rest of the country,» the bank said in a statement. Tighter lending practices adopted by banks, fearing that customers will struggle to repay loans in the downturn, have hurt the sector, limiting the number of homes purchased with financing. Home buyers have also been slow in chasing down purchasing opportunities as labor market conditions deteriorate and household incomes fall following recent austerity measures introduced by the government. The number of deals conducted from April to June with the help of banks fell 1 percent year-on-year to 17,575. «The fact that the drop in volume and value of deals being conducted is greater than the dip in transactions completed reflects buyers turning to smaller and cheaper apartments,» BoG added. The value of homes being traded in the second quarter fell 13 percent on an annual basis, while the size of the properties sold fell at an annual pace of 3.2 percent.