The Greek economy was estimated to have grown by 1.6% last year and is expected to grow by another 2.5% this year, amidst a tourism upsurge. And after seven years of falling house prices, things are turning around.
In Greece’s urban areas, house prices dropped by just 0.67% during the year to Q3 2017.
During the latest quarter, house prices in urban areas fell slightly by 0.06% but actually increased 1.18% when adjusted for inflation.
This improvement was also seen in the major cities:
- In Athens, the average price of apartments fell slightly by 0.44% (-1.39% in real terms) during the year to Q3 2017, the lowest y-o-y decline since Q2. Quarter-on-quarter, prices increased 0.1% (1.34% in real terms).
- In Thessaloniki, the country’s second largest city, there was a slight house price drop of 0.7% (-1.7% in real terms) y-o-y in Q3 2017, an improvement from last year’s 2.1% annual fall and the lowest decline since Q1 2009. Quarter-on-quarter, prices fell by 0.2% (increased 1% in real terms) in Q3 2017.
- In other cities (excluding Athens and Thessaloniki), house prices fell by 1% (-2% in real terms) during the year to Q3 2017, an improvement from y-o-y declines of 2% in the previous quarter and 1.8% a year earlier. In a quarterly basis, prices increased 0.1% (1.3% in real terms) in Q3 2017.
Property transactions and construction activity are both rising again, but are still far below their peak levels. During the first three quarters of 2017, the number of residential property transfers recorded at the Athens land registry rose by 16.2% from a year earlier.
However, high property taxes in Greece continue to discourage demand. In fact, property taxes have increased seven times since the global financial crisis. For September 2017 to January 2018 alone, about 6.3 million owners are required to pay €3.15 billion in property tax (ENFIA), up from €3 billion in 2014 and from just €500 million in 2009. Rental taxes have also increased. For the first €12,000 of annual rent revenues the tax is 15%, up from 11% until 2015. For rent revenues between €12,000 and €35,000 per year the rate soars to 35%.