Property Market in Greece is Buoyant

The Greek property market saw a sudden burst of activity towards the latter end of 2005 as many property development companies and building firms pushed to get their build permissions in place prior to the date upon which VAT became applicable to all new constructions in 2006. 

This surge in activity was followed by a push on the mortgage market in Q1 2006 as buyers bought into the new wealth of stock on the market and then everything quietened down for a while…but now once again the property market in Greece is buoyant and the leading local lending institutions are confident that this level of heightened activity will pervade at least throughout 2007 - which is good news for those with Greek real estate assets to sell as well as those contemplating developing property in Greece or considering off plan investment for a potential short term turn around on capital.

The factors fuelling the sudden surge in activity in terms of property in Greece are manifold and need to be understood before investment commitment can be made.

On the one hand a rise in employment numbers and also average wages being paid as well as a corresponding increase in household disposable income has gradually crept up and permeated the entire economy in Greece.  While the nation still has a long way to go to bring unemployment down further to at least meet the EU average, the current government is committed to doing all it can to make this happen.  GDP growth since 2003 has been strong and regularly touched 4% and these factors have meant that there is greater affluence among many householders in Greece and this has fuelled strong consumer spending and investment activity.

One of the many areas of the country’s economy to benefit has been the property sector.  Historically Greek people have not borrowed to buy property, they have been handed real estate down through the generations with multiple family members staying together in one property rather than borrowing to buy or build another.  But gradually this attitude is changing.  The younger generations are keen to have homes of their own and the older generations are keen to upgrade their property – and what’s more, Greece has very strong inward migration of immigrants and these people are also buying up vacated property stock.  In addition to all of these factors more and more Greek citizens are buying second holiday homes for the first time - and because their nation is so stunningly beautiful and also benefits from hundreds of islands and masses of coastline, the vast majority prefer to own a second home in their own country.

As a result of this strong development in purchasing activity the mortgage market in Greece has suddenly taken off.  Until very recently the mortgage to GDP ratio in Greece was hugely divergent compared to the EU (15) average, and yet if lending activity continues at this rate the ratio could be spot on the median for the European Union community within months!

Off the back of both strong investment activity and even stronger mortgage market growth, the likes of the National Bank of Greece have been posting significant profit announcements in the past week with bank insiders confidently predicting the current state of affairs could continue throughout 2007.

There are a few considerations that property investors need to bear in mind before they commit to property in Greece however – firstly many believe that the European Central Bank has not yet finished its interest rate rising spree and that the current 3.5% interest rate could rise to 3.75 or even 4% by the end of the year.  This will naturally have a dampening effect on borrowing activity.  Additionally the Greek economy is one to watch - if any significant external shocks or internal issues appear to shake it, that could see the end for the time being of such consumer confidence that we are witnessing today. 

Finally and on a more positive note, it is widely predicted that the Finance Ministry’s recent proposals to abolish all the multifarious taxes related to real estate in Greece and replace them with one single and simple, relatively low tax rate for property owners will be ratified and prove very popular with international buyers who are at present possibly put off buying a second home in Greece because of the complications associated with the ongoing ownership of real estate in the country.

If you keep these points in mind when looking at the viability of any given project you shouldn’t go too far off the mark.

Special Reports: Property News for Greece

Greece Property Buying Process
Buying investment property in Greece is usually a straightforward process however it is necessary to have a lawyer to assist

Greece Property Investment Overview
Most property investors targeting Greece focus on the tourism sector but city based commercial property investments are growing in popularity

Greece: The Property Investor’s Guide
Immense real estate opportunities and choice abound for property investors in mainland Greece and on the Greek islands.