Real estate prices fall while rentals rise
Migrants, students and young people help shape the real estate rental market. Demand for small apartments in Attica has pushed rents sky-high, even though the quality of rental properties does not justify landlords’ exorbitant demands. An unfettered rise in the rental prices of small apartments has led to a growing discrepancy between the prices of small and large apartments. For example, newly built one- and two-bedroom apartments in Aghia Paraskevi are leased for as much as 10 euros per square meter, while newly built apartments in the same area of 80 square meters or more go for up to 8 euros/sq.m. People involved in real estate say there are very few advertisements for small apartments compared with previous years and, in many cases, only one advertisement is need to rent a property. As Nikos Gianoulelis, managing director of his own real estate consultancy, says: «The huge increases in the rents of small apartments are due to a large extent to economic migrants, students and young people who decide to live on their own. In addition, contractors don’t build small apartments because they significantly increase the construction costs of an apartment block.» Since the start of the year, there has been a significant reduction in rental prices for apartments of more than 100 square meters. This has been attributed to exorbitant demands made by owners in the past, which led to apartments not being let for more than a year. Owners’ loss of revenue has forced them to rationalize their demands and drop rents to levels commensurate with supply and demand. For example, someone who bought a 105 sq.m. apartment in Holargos decided to rent it for 1,100 euros. A year later, the owner realized that his demands were excessive and now he is asking 650 euros for rent. Though the property in question is new, it still has not been rented. However, many owners insist on asking exorbitant rents, regardless of the size of the property, mentioning only the area in which it is located. In Filothei, for instance, a 120 sq.m. apartment is for rent at 1,600 a month. Another in the Papagou area is going for 1,700 euros. Both apartments have not been rented for 18 months, and real estate agents believe they will remain empty until the owners drop the prices by as much as 50 percent. Housing sales fell considerably in the first half of 2003 compared with the last half of 2002. Though the rate of increase in real estate prices seems to be slowing after a long period of continual rises, real estate consultants and data from the lawyers’ union confirm that sales have decreased noticeably and the situation is expected to remain the same till the end of the year. (Attorneys’ offices give 35 percent of their real estate contract fee to the Lawyers’ Association and this sum has shown a 50 percent decrease compared with the second half of 2002.) Few sales There were very few homes sales in the first half of this year, which has been attributed both to the draft tax legislation – in particular changes in the specification of interest on taxable income for those who have a housing loan – and to the war in Iraq. In the first half of the year, prices in the expensive neighborhoods of Attica fell up to 1,000 euros per square meter. In Palaio Psychico the highest sale price for an apartment was around 5,500 euros/sq.m. at the end of 2002, compared with 4,500 euros/sq.m. today, while in Glyfada top prices have fallen from 4,500-5,000 euros to 4,000 euros/sq.m. There is a trend toward prices stabilizing in the rest of Attica compared with the second half of last year, but sale prices have risen up to 20 percent in the western suburbs, where the increases have been attributed solely to construction quality.