Debt crisis drags Greek real estate market into the abyss
The financial crisis and Greece’s high level of over-indebtedness have significant consequences, not only on economic development and on the labour market. After all, the domestic real estate market in particular has come under severe pressure in recent years. Many households lack the financial means to purchase residential property, while others are forced to sell their own home in view of the precarious financial situation – and far below market price. Wealthy Greeks, meanwhile, prefer to invest their money in Swiss and German real estate, as they believe that their capital there is safe from the grasp of the Greek tax authorities. Under pressure from the EU, the government has recently committed itself to cutting spending and wants to part with state-owned land in order to fill the empty state coffers. This opens up attractive opportunities for private individuals interested in purchasing a holiday home in the southern European country. In view of the large supply of Greek real estate, their prices have recently collapsed significantly. In the coming months, demand will hardly be able to keep pace with supply, so that a further price decline is to be expected. According to the experts, a trend reversal is currently not in sight. On the contrary, the Greek government’s planned tax reform is likely to increase the oversupply of houses and building sites much more significantly. In order to increase state revenues, the government is flirting with higher taxation on land and property. Therefore, it is already foreseeable that many locals will sell their own land and real estate in good time – a development that has long since taken hold.
Greek property prices at historic low
Even taking into account other crisis countries such as Spain, Italy, Portugal or Ireland, it remains to be said that nowhere else in Europe is a holiday residence currently as inexpensive as in Greece. For all those who dream of owning their own home on the sunny Mediterranean, Greek real estate is becoming very attractive thanks to the enormous drop in prices. Numerous private individuals and investors from abroad have now recognized the opportunity for the big coup, which is why interest in purchasing a Greek holiday property has recently increased noticeably. Although the total number of enquiries was already three times as high last year as in previous years, the number of interested parties is likely to continue to rise this year. This is not surprising, especially since the prices of apartments and villas on the island have collapsed by up to 40 percent since the beginning of the crisis. Houses in good locations with a living space of 100 square meters can be purchased for as little as 130,000 euros. On the enchanting east coast, chic villas in an excellent location can change hands at prices of only 1,700 euros per square metre. Even a holiday home built according to German quality standards with an area of 80 square meters including a terrace can be built at a sales price of about 95,000 euros. Holiday homes in Italy or Spain cannot even come close to keeping up with this low level. The real estate market on the Greek mainland and on the other islands has collapsed even more drastically: With prices that are in some cases 50 percent below pre-crisis levels, houses are already being sold off.
Government plans to reduce bureaucratic hurdles and simplify approval procedure
Greece has by far the cheapest building plots in the EU-Mediterranean region. However, the change of ownership is currently associated with long waiting times and can be seen as a real bureaucratic challenge. However, this is set to change soon: the government now wants to introduce a functioning cadastral system. The extensive examination of property rights, which previously preceded the purchase of a property, is to be significantly reduced. According to the Ministry of Economic Affairs, all properties are to be recorded in the cadastre by 2020. Other bureaucratic hurdles are also to be uncovered and abolished in order to release the brake on progress and reduce state costs. Work is also underway, for example, on the introduction of a digital building permit procedure in order to speed up the decision-making process for new construction projects and shorten the associated deadlines. According to market specialists, however, the speed with which future retirement and second seats can be approved is already unparalleled in the whole of Europe.
Uneven development of the real estate market in Europe
In addition to Greece, Spain is also one of the losers of the real estate crisis. A trend reversal is currently not in sight for the Iberians. While the Netherlands and Italy also had to record a significant decline in domestic real estate prices, things are looking up in Ireland and in Germany’s neighboring countries France, Austria and Switzerland. Dublin and Zurich in particular are among the preferred cities for investors throughout Europe. The metropolises of London, Istanbul, Copenhagen and Stockholm also take first place. Despite the pleasing development in these major European cities, it should be noted that no other EU country has as many top cities as the Federal Republic of Germany.
German real estate prices rise inexorably
The German real estate market is clearly decoupling from Europe. Prices for houses and apartments in this country have risen higher in recent months than in any other EU country. At the same time, a shortage of supply and increasing demand are ensuring that German real estate is becoming more and more expensive. According to experts, prices will rise by 4.5 percent this year and by another 4 percent next year – an absolute peak in the eurozone. According to Bundesbank estimates, residential real estate has already become almost a fifth more expensive since 2010. Despite the inexorable price increase, attractive residential projects can also be found from time to time, such as under http://www.trepnau-gruppe.de/. Meanwhile, according to the central bank’s monthly report, real estate prices in Germany’s seven largest cities rose by about 9 percent in 2013 alone. It should be noted that location is the most important cost driver and that prices for residential real estate have a pronounced regional difference. For example, the top cities in the west of the country are a good 60 percent more expensive than in the east.
