For decades the Greek banks and the real estate market were operating as communicating vessels, with the former granting long-term mortgage loans to satisfy the increasing demand for real estate properties. With Greece being through the sixth year of economic crisis, the financial institutions were forced to reduce loans and now the Greek property market appears to be stagnant.
Without access to liquidity the number of real estate sales fell, while the number of unsold properties rose dramatically.
According to a nationwide survey conducted by E-Real Estates, during the first quarter of 2015 only 750 mortgage loans were granted, compared to 2,500 mortgage loans last year, 75,000 in 2009 and 120,000 in 2006. At the same time, in the first three months of 2015, a total of 1,800 properties were sold compared to 15,000 in 2014 and more than 165,000 in 2004.
As a result, there are at least 250,000 real estate properties in Greece that are not being sold, while the average time required for their sale was estimated at nearly eight months.
Although real estate prices have taken a downward turn, falling to by 17% in 2014 compared to the previous year, the demand still remains weak. According to E-Real Estates managing director, Themistoklis Bakas the main issues that cause a lack of demand are: the rapid decline in Greek households’ disposable income and the rising unemployment combined with the excessive taxation on real estate.
“Young couples, who once constituted the largest percentage of buyers, as well as pensioners, who used to acquire properties as an investment appear cautious,” he said.
Private investment in housing across Greece was 9.8% of GDP in 2007, however it fell to 2.2% in 2013 and 1.3% in 2014.