June 12, 2019 / 11:35 AM / a month ago

Greek housing sector rebound gains pace as economy recovers

    * Residential property prices rise 4% y/y in Q1
    * Economic recovery, foreign interest drive uptrend
    * Home prices had plunged 42% since 2008 peak

    By George Georgiopoulos
    ATHENS, June 12 (Reuters) - The recovery in Greece's housing
market gained speed in the first quarter, central bank data
showed, with an expanding economy and growing foreign interest
likely to keep the uptrend intact.
    Property accounts for a large chunk of household wealth in
Greece, which has one of the highest home ownership rates in
Europe at 80 percent, versus a European Union average of 70
percent, according to the European Mortgage Federation.
    Apartment prices rose 4.0% in the first quarter compared
with the same period a year earlier, Bank of Greece data showed,
accelerating from an upwardly revised 2.6% increase in the final
quarter of 2018.
    More specifically, prices rose by 5.8% year-on-year in
Athens, where home-sharing platforms like Airbnb and a "golden
visa" programme - a renewable five-year resident's permit in
return for a 250,000-euro ($285,000) investment in real estate -
have grown very popular.             
    Greek house prices fell 42% between 2008, when the country's
protracted recession began, and the end of 2017.
    A similar trend is seen in Greek prime office prices, which
rebounded 7.0% last year.             
    "Real estate prices are tracking the positive path of
economic activity, with Athens outperforming," National Bank
economist Nikos Magginas said on Wednesday.
    The uptrend is also supported by a sharp decline in home
building in previous years, which curbed the supply of new
homes.
    "The stock of unsold properties is slowly being absorbed.
The price recovery will likely continue as long as the economy
stays on a recovery path and fire sales of repossessed homes by
banks are avoided," he said. 
    The Greek market has been dampened by property taxes imposed
to plug budget deficits, tight bank lending and a jobless rate
still around 18.1%, the highest in the 19-nation euro zone.
    But economic prospects have improved since 2015 when Greece
signed up to a third bailout package worth up to 86 billion
euros ($107 billion). The country emerged from its latest
bailout in August last year and is now relying on markets to
cover its financial needs.
    Greece's 180 billion euro economy expanded in
January-to-March, but at a slower annual pace than the quarter
before, mainly driven by consumer spending and a pick-up in
investments.             
    Following is a table on Greek apartment prices from the
Central Bank of Greece:

****************************************************************
                         2013  2014  2015  2016  2017  2018  Q1 
Index                    69.5  64.3  61.1  59.6  59.0  59.9 61.6
Change y/y %            -10.9  -7.5  -5.1  -2.4  -1.0   1.6* 4.0
New (up to 5 years)      71.4  66.8  63.0  61.2  60.7* 61.8*63.6
Change %                -10.9  -6.5  -5.6  -3.0  -0.8*  1.8* 4.0
Old (older than 5 years) 68.3  62.8  59.8  58.6  57.9  58.8*60.4
Change %                -10.8  -8.1  -4.7  -2.0  -1.2   1.4* 3.9
----------------------------------------------------------------
 * revised
 source: Bank of Greece

 (Reporting by George Georgiopoulos; Editing by Susan Fenton)
  
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