ATHENS (Reuters) - A downturn in Greece’s property market deepened in the first quarter, as uncertainty over its bailout programme and chronic weakness in its banking sector further eroded a traditional pillar of the country’s ailing economy.
Property accounts for a large chunk of household wealth in Greece, which has one of the highest home ownership rates in Europe - 80 percent versus a European Union average of 70 percent, according to the European Mortgage Federation.
Apartment prices fell by 1.8 percent in the first three months of 2017 from a year earlier, Bank of Greece data showed on Thursday, accelerating from a 1.0 percent drop in the final quarter of last year.
That took the cumulative fall since 2008, when the country’s protracted recession began, to 41.8 percent.
The market has been hit by property taxes imposed to plug budget deficits, a tight credit market and a jobless rate hovering around 23 percent - the highest in the 19-nation euro zone.
Apart from their negative effect on household wealth, falling property prices also affect collateral values on banks’ outstanding real estate loans.
The slide has gradually eased from 10.8 percent in 2013 to 2.4 percent last year, and economists expect prices to level out soon.
“Uncertainty related to the completion of a bailout review that prevailed in the first quarter and continued deleveraging by banks weighed on the property market,” National Bank economist Nikos Magginas said.
A near-term stabilisation of prices remained the baseline scenario, expected to be confirmed once economic activity picks up in the coming quarters, he added.
Greece was pushed to the brink of default by a debt crisis that at one stage jeopardised its membership of the euro zone. Its economic prospects have improved since it signed up to a new bailout package worth up to 86 billion euros (£74.51 billion) two years ago.
Gross domestic product is still contracting, however, edging down 0.1 percent between January and March as jitters over the conclusion of a review of the bailout hurt business confidence.
The European Commission projects Greece’s economy will rebound by 2.1 percent this year.
Reporting by George Georgiopoulos; editing by John Stonestreet