Urban Residential Property Market

Residential property values in Greece have never fallen in nominal terms during the last 15 years. Although there have been periods of real price falls, these have been hidden by high inflation. As a result, Greeks are very confident about the capital growth prospects and low risk of residential
property. 80% of Greek households own their own property, the highest percentage in the EU.

A large percentage of residential property is also owned with no mortgage. A growing economy, low interest rates and the availability of finance has facilitated strong growth in new residential property.

Mortgage lending is increasing year-on-year but total debt is far below the EU average so there is the potential for substantial further growth. The average Greek household total debt for 2006 is approx. 20% while average for EU household is 55%.

In urban areas the highest prices are achieved for new developments with parking facilities, large balconies, modern kitchens and bathrooms. In the more expensive urban areas of Athens prices are now above €7500m² for top quality residential property. Prices have doubled in the last 10 years.

VAT at 19% is applicable on new property with a build permit from 1st January 2006. This replaces transfer tax at 11.33%. During 2005 there was additional market activity as buyers rushed to complete transactions before the implementation of the new laws. The additional demand caused a further
increase in prices.

During 2006 the market has continued to grow, albeit at a lower rate, despite increases in interest rates over the last 12 months. Further increases in interest rates will probably slow the market but the fundamentals of low debt levels, strong confidence in property and demographic changes will continue to underpin the market.

Source: Lambert Smith Hampton