ECONOMY

House prices set to keep falling in 2011

The correction in residential property prices is set to continue in 2011 at the same rate as this year, particularly in the case of newly built apartments, according to market observers. Prices are seen dropping between 5 and 10 percent given that the downward trend of the market is showing no signs of change. Babis Haralambopoulos, a certified property valuator and president of the Hellenic Institute of Valuation, told Kathimerini that the correction in house prices this year ranged between 5 and 10 percent, depending on the area quality and whether or not the construction company was facing any financial problems. There were, however, certain areas in northern Greece and Thessaloniki in particular that saw prices drop by over 15 percent this year. Haralambopoulos argues that the price drop can be seen in a range of residential properties, including big apartments and detached houses, as well as in areas with many new houses, such as Spata, Markopoulo and Mandra, just outside the capital. Areas lacking infrastructure have also witnessed a considerable decline in prices. For example, neither Glyka Nera nor Gerakas in eastern Attica has a sewage system, but before prices began to drop buyers had been paying similar amounts to those in well-developed areas of Athens like Halandri and Aghia Paraskevi. «What we are seeing now is that we have gone deep into the period of crisis and next year we will reach its hard core, with household incomes already hurt by tax hikes and other measures. Job insecurity also means that people do not have the means to purchase houses at the usual rates, to say nothing of the banks providing far fewer mortgages,» explained Haralambopoulos. «That is why we are seeing the few people that are buying opting for small newly built apartments or older properties, and we should expect a further drop in prices, a decline in transactions and no new buildings going up,» he adds. Having said that, Haralambopoulos said he expects smaller properties to be the exception, as they have already attracted most of the demand, so their prices will resist pressure.