Residential property prices in Greece continue to fall, with the Greek economy enduring one of its worst crises in its history.
The average price of apartments in Greece fell by 4.5% y-o-y to Q2 2011, according to the Bank of Greece. Over the same period, the price of old apartments (5 years or older) fell 5.5%, while prices of newer apartments fell 3%.
The bigger the city, the higher the price falls:
• In Athens, average house prices fell 6.71% y-o-y to end-Q2 2011
• In Thessaloniki (the second largest city) prices fell 4.7% over the same period
• In “all other cities”, house prices dropped 3.5% y-o-y in Q2 2011
• In “all other areas”, prices fell 1% over the same period
Residential real estate transactions fell in number, volume, and value. In the second quarter of 2011, residential real estate transactions were down 39.1% from a year earlier.
Tax increases, spending cuts, privatization and other crucial economic reforms are part of the conditions of the €110 billion EU-IMF bailout loan approved in May 2010. Other reforms include strengthening laws against rampant tax evasion, liberalizing the labour market and selling state assets. The sale of 6,000 Greek islands, reported by The Guardian (and alas, quoted by this site) was not part of the privatization program.
In September 2011, the government unveiled new austerity measures to affirm its commitment to meet its budget targets and to secure the release of a €8 billion aid tranche in October 2011. These include the following:
• Slashing pensions, especially for high-income retirees
• Taxing low-income earners. The taxable income threshold would be reduced to EUR5,000 from EUR8,000
• Placing about 30,000 public workers in labor reserve
• The government also affirms its commitment to stay in euro
These fresh austerity measures are expected to ignite more popular protests.
Greece’s 2010 fiscal deficit was 9.4% of GDP, down from 13.6% in 2009. A further reduction to 6.5% of GDP in 2012 is demanded by troika. The national debt is expected to be roughly 150% of GDP in 2011, up from 142.5% in 2010 and 126.8% in 2009.
The average price of apartments in Greece fell by 4.5% y-o-y to Q2 2011, according to the Bank of Greece. Over the same period, the price of old apartments (5 years or older) fell 5.5%, while prices of newer apartments fell 3%.
The bigger the city, the higher the price falls:
• In Athens, average house prices fell 6.71% y-o-y to end-Q2 2011
• In Thessaloniki (the second largest city) prices fell 4.7% over the same period
• In “all other cities”, house prices dropped 3.5% y-o-y in Q2 2011
• In “all other areas”, prices fell 1% over the same period
Residential real estate transactions fell in number, volume, and value. In the second quarter of 2011, residential real estate transactions were down 39.1% from a year earlier.
Tax increases, spending cuts, privatization and other crucial economic reforms are part of the conditions of the €110 billion EU-IMF bailout loan approved in May 2010. Other reforms include strengthening laws against rampant tax evasion, liberalizing the labour market and selling state assets. The sale of 6,000 Greek islands, reported by The Guardian (and alas, quoted by this site) was not part of the privatization program.
In September 2011, the government unveiled new austerity measures to affirm its commitment to meet its budget targets and to secure the release of a €8 billion aid tranche in October 2011. These include the following:
• Slashing pensions, especially for high-income retirees
• Taxing low-income earners. The taxable income threshold would be reduced to EUR5,000 from EUR8,000
• Placing about 30,000 public workers in labor reserve
• The government also affirms its commitment to stay in euro
These fresh austerity measures are expected to ignite more popular protests.Greece’s 2010 fiscal deficit was 9.4% of GDP, down from 13.6% in 2009. A further reduction to 6.5% of GDP in 2012 is demanded by troika. The national debt is expected to be roughly 150% of GDP in 2011, up from 142.5% in 2010 and 126.8% in 2009.
Analysis of Greece Residential Property Market »
RENTAL YIELDS
Last Updated: Jul 04, 2011
Over the past 5 years gross rental yields have decline to very low levels, so that if rental income is your aim, investments in rental properties in Greece are now a rather unattractive proposition for landlords.
We look at Athens and at Crete, and whatever we look at, the picture is broadly the same.
In Athens, small (70 square metre) apartments in the centre may yield around 2.8%. Larger apartments yield around 2%
In the suburbs of Athens, gross rental yields are marginally more attractive, at around 2.8% to 3.5%. Houses yield a little less.
In Crete, rental returns on apartments are just marginally better, at around 3.5%
We look at Athens and at Crete, and whatever we look at, the picture is broadly the same.
In Athens, small (70 square metre) apartments in the centre may yield around 2.8%. Larger apartments yield around 2%
In the suburbs of Athens, gross rental yields are marginally more attractive, at around 2.8% to 3.5%. Houses yield a little less.
In Crete, rental returns on apartments are just marginally better, at around 3.5%
TAXES AND COSTS
Last Updated: Sep 28, 2011
Rental Income: Rental income is taxed at progressive rates, from 15% to 45% depending on the taxable income. Rental income is further subject to 1.5% surtax.
Capital Gains: Capital gains realized from the sale of property held for less than 5 years are taxed at 20%. No capital gains tax is levied for properties held for over 25 years.
Inheritance: Inheritance tax is levied at different rates depending on the relationship between the deceased and the beneficiaries.
Residents: Residents pay taxes on their worldwide income at progressive rates, from 15% to 45%.
Capital Gains: Capital gains realized from the sale of property held for less than 5 years are taxed at 20%. No capital gains tax is levied for properties held for over 25 years.
Inheritance: Inheritance tax is levied at different rates depending on the relationship between the deceased and the beneficiaries.
Residents: Residents pay taxes on their worldwide income at progressive rates, from 15% to 45%.
BUYING GUIDE
Last Updated: Apr 03, 2007
The total roundtrip transaction cost, i.e., the cost of buying and selling a property, ranges from 11.4% to 19%. The buyer pays a total of 10% - 16%, whereas the seller pays a miniscule 1.25% - 3%. The agent’s commission (2% - 3%) and transfer tax (7% - 11%) make up the bulk of the cost. Properties constructed after January 2006 are subject to 19% VAT instead of a transfer tax.
LANDLORD AND TENANT
Last Updated: May 30, 2006
Rent: Rents are freely negotiable between the tenant and the landlord. There is no legal limit on the deposit.Tenant Security: All residential rentals have a minimum legal duration of three years. If a contract for a lesser period is negotiated, the three years period applies to the landlord, but not to the tenant. A contract for three years or longer terminates automatically at the end of the contract period, without need for notice.
ECONOMIC GROWTH
Last Updated: Sep 21, 2011
Greece’s economic and debt crisis continue
Greece’s debt problem is deeply rooted. When the euro was first introduced in 1999, Greece was left out because of its high budget deficit and inflation. Embarrassed by the isolation, Greece appeared to clean up its act and fix its finances and macroeconomic fundamentals. By January 2001, it was able to adopt the euro as its official currency.
In November 2004, however, Greece admitted that it had fudged figures to gain entry to the eurozone. Its budget deficit had never been below the EU limit of 3% of GDP since 1999. It was also revealed in early 2010 that Greece had paid Goldman Sachs and other banks to hide the true amount of its debt and borrowing.
Euro adoption led to a cycle of debt-financed growth and deficit spending. Greek sovereign debt spreads fell, allowing it to borrow cheaply. Access to cheap funds allowed it to continually pump-prime the economy, leading to higher growth.
With the higher growth, government officials rewarded themselves with higher incomes and pensions and generous leave credits and bonuses. The bureaucracy is also bloated and overstaffed.
After assuming office in October 2009, Prime Minister George Papandreou revealed that the deficit was much higher than what the previous government claimed. As expected, his response to the crisis included austerity measures: spending cuts and tax increases.
Papandreou also vowed to reduce the public sector and fight rampant tax evasion. Around 5 million Greeks (6 out of 10) pay no income taxes.
In May 2010, European leaders and the International Monetary Fund (IMF) agreed to a three-year, €110 billion bailout for Greece, tied to a stiff austerity package. These moves were not accepted by the public, and violent protests, rallies, strikeouts took place in key areas.
In the second quarter of 2011, the economy shrank by 7.3% from a year earlier, according to the Hellenic Statistical Authority. GDP had fallen 4.2% in 2010, and 2% in 2009.
The economy is expected to contract further by 5% this year and by another 2% in 2012, according to the IMF, dampening hopes that the country will trim its deficit to 7.5% of GDP in 2011.
Greece’s 2010 fiscal deficit was 9.4% of GDP, down from 13.6% in 2009. The national debt is expected at roughly 150% of GDP in 2011, from 142.5% in 2010 and 126.8% in 2009. In 2012, the national debt is projected to climb further to about 190% of GDP.
In Q2 2011, Greece’s unemployment rate rose to 16.3%. Unemployment is expected to rise to 18% in 2012, up from 7.7% in 2008.
The inflation rate is projected to slow to 2.9% in 2011 and 1% in 2012, according to the IMF. From 2001 to 2010, the country had an average inflation rate of 3.4%.
In November 2004, however, Greece admitted that it had fudged figures to gain entry to the eurozone. Its budget deficit had never been below the EU limit of 3% of GDP since 1999. It was also revealed in early 2010 that Greece had paid Goldman Sachs and other banks to hide the true amount of its debt and borrowing.
Euro adoption led to a cycle of debt-financed growth and deficit spending. Greek sovereign debt spreads fell, allowing it to borrow cheaply. Access to cheap funds allowed it to continually pump-prime the economy, leading to higher growth.
With the higher growth, government officials rewarded themselves with higher incomes and pensions and generous leave credits and bonuses. The bureaucracy is also bloated and overstaffed.
After assuming office in October 2009, Prime Minister George Papandreou revealed that the deficit was much higher than what the previous government claimed. As expected, his response to the crisis included austerity measures: spending cuts and tax increases.
Papandreou also vowed to reduce the public sector and fight rampant tax evasion. Around 5 million Greeks (6 out of 10) pay no income taxes.
In May 2010, European leaders and the International Monetary Fund (IMF) agreed to a three-year, €110 billion bailout for Greece, tied to a stiff austerity package. These moves were not accepted by the public, and violent protests, rallies, strikeouts took place in key areas.
In the second quarter of 2011, the economy shrank by 7.3% from a year earlier, according to the Hellenic Statistical Authority. GDP had fallen 4.2% in 2010, and 2% in 2009.
The economy is expected to contract further by 5% this year and by another 2% in 2012, according to the IMF, dampening hopes that the country will trim its deficit to 7.5% of GDP in 2011.
Greece’s 2010 fiscal deficit was 9.4% of GDP, down from 13.6% in 2009. The national debt is expected at roughly 150% of GDP in 2011, from 142.5% in 2010 and 126.8% in 2009. In 2012, the national debt is projected to climb further to about 190% of GDP.
In Q2 2011, Greece’s unemployment rate rose to 16.3%. Unemployment is expected to rise to 18% in 2012, up from 7.7% in 2008.
The inflation rate is projected to slow to 2.9% in 2011 and 1% in 2012, according to the IMF. From 2001 to 2010, the country had an average inflation rate of 3.4%.
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