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Greek (Crete) Property News Stories
(collated from a variety of sources)
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23 May 2008 - Land register set for initial entries in June (Kathimerini Newspaper)
Public Works and Environment Minister Giorgos Souflias announced that the
process of listing millions of unregistered properties around Greece is due to
begin next month. Greece and Albania are the only European countries without
land registers. The process that should lead to some 3 million Greeks declaring
their properties so they can be entered on the country’s first comprehensive
land register is due to begin in less than a month’s time, it was announced
yesterday.
Mr Souflias said that people who own property in 107 areas, including dozens of
municipalities of Attica, should begin submitting paperwork from June 17 so they
can be entered on the registry. The deadline for people living in Greece to hand
in the necessary documents will be September 30, while those living abroad who
own properties in these areas have until December 30 to act.
“This is a really ambitious program with which we plan to record 6.7 million
title deeds in less than four years and introduce some 310,00 hectares of land
onto the registry,” said Souflias.
It is though that two in three adults living in Greece will have to go through
the process of registering their property so a help line (1015) will be set up
to assist those with queries. Property owners will be able to visit one of 76
land registry offices to submit their paperwork or can fill in the forms online
at the registry’s website, which is www.ktimatologio.gr.
It will cost applicants 35 euros to register each property and another 20 euros
for any other facilities, such as separate storage rooms or parking bays.
Souflias pleaded with property owners, who will need a photocopy of their title
deeds, to be prompt with their applications.---------------------------------------------------------------------------------------------------------
21 February 2008 - Minister calls for holiday homes to respect environment (Kathimerini Newspaper)
The holiday home market should be developed in Greece, but only if it respects
the natural and architectural environment, said Tourism Development Minister
Aris Spiliotopoulos, speaking at the 2nd Tourism & Property Conference in Athens
yesterday.
The minister referred to the tourism zoning plan that is currently the subject
of public consultation. He said it is one of the main steps toward the creation
of an operative framework for investing with clear rules and priorities so that
tourism has a balanced development across the country.
He added that the plan will put an end to anarchy in development, the lack of
programming and the haphazard growth of tourism in Greece. “We will not follow
the Spanish model of holiday home development,” Spiliotopoulos stressed.
The president of the Hellenic Chamber of Hotels, Gerasimos Fokas, said that
clear terms and procedures should be established for the construction of holiday
homes. This will ensure that such homes do not lag behind other residences in
terms of quality of construction, while town planning studies are also
essential, as new villages spring up from nothing and they should have common
spaces and social structures.
Fokas added that there must be limits in various aspects of development, such as
a minimum ratio of hotel beds to beds or rooms in houses.---------------------------------------------------------------------------------------------------------
01 February 2008 - Greece in the top ten of places to live as voted by
visitors to 'The Emigration Show' at APITSL
Enquiries about property in the USA, Canada and Australia dominated buyer
interest at APITSL, as growing numbers of Brits look to relocate overseas and
join the record
 389,000
Brits that emigrated abroad in 2007. Canada (9th) recorded the biggest jump on
the league table, rising seven spots, while Australia climbed five, reaching
15th. This supports the rising trend of British buyers moving away from the pure
investment market and towards holiday and retirement property – a pattern
identified by the large amount of attendees at The Emigration Show at APITSL.
The USA also attracted a lot of interest, climbing six spots to fourth, just
behind Turkey, as UK investors also took advantage of a buyers market where
property prices fell by an average of 30% y-o-y and the Dollar weakened against
the Pound by around 25% last year.
Movers and shakers
The only new entry into the Top 20 was Germany (19th), while Italy (5th) and
Egypt (11th) performed strongly, each rising three spots on the Top 20 table.
Interest in Croatia (-6), Bulgaria (-5) and Portugal (-5) declined significantly
in 2007.
“What’s really interesting about our annual Top 20 survey is that it shows UK
buyers as traditional in one respect – in favouring Spain and France – but also
willing to seek out new hot spots and investment opportunities elsewhere: across
Europe, North Africa, North America, Asia and the Middle East,” said Richard
Way, editor of APITS magazine. “When looking for a second home or a new life in
the sun it seems that Spain’s mix of great weather, rich culture and beautiful
coastline is keeping the country at the number one spot, but buyers aren’t
afraid to consider Germany, Montenegro, Morocco, Las Vegas, Thailand or Dubai.”
The UK’s Top 20 overseas property destinations according to A Place in the Sun:---------------------------------------------------------------------------------------------------------
12 December 2007 - Demand is seen as pushing winter property prices in many
mountainous areas of Greece to higher levels, making such houses an impossible
dream for most people (Kathimerini Newspaper)
Growing demand for land and properties in certain mountainous regions around the
country has lately started affecting real estate standards, by pushing prices to
higher levels. The most popular of such destinations include Mt Parnassus,
Kalavryta, Mount Pelion, Metsovo, Elati Trikalon, Mount Olympus, Karpenisi,
Florina and Oreini Corinthia, which are all beautiful areas, but the rising land
prices in these regions have made them simply a dream for most people.
A major portion of demand comes from foreigners, who believe that properties in
mountainous regions of Greece are cheaper to buy. Most domestic visitors seem to
prefer to rent a place in these areas, either for the entire winter or the whole
year. By doing this they don’t have to worry about making reservations for their
weekend escapes from big cities.
Preferences in recent years have tended toward certain cosmopolitan villages on
Mount Parnassus and Pelion, given their close proximity to ski centers as well
as to infrastructure and facilities allowing for several sporting and leisure
activities. Purchasing an old home and renovating it has become popular, but
soaring prices are a deterrent as they can reach as high as the costs of summer
houses on some popular and very expensive Aegean islands, such as Myconos and
Santorini. Land plots may in some cases cost up to –300,000 per 1,000 square
meters, while traditional houses are sold at extremely high prices.
Mt Pelion is a cheaper alternative to Parnassus, with a number of popular
villages – Markinitsa, Portaria, Vizitsa, Tsagarada, Sagora and Milies – drawing
increasingly higher numbers of potential property buyers each year. Houses on
Mount Pelion are priced between –2,500 and –3,200 per square meter. By
comparison, to purchase a house on Parnassus may cost up to –4,000 per square
meter. In nearby Itea and Delphi, prices are 10 to 30 percent lower. In
Karpenisi, one popular location is the Potamia Valley, where many villages lie
within a green landscape very close to both Karpenisi town and the local ski
center. Even though modern constructions are starting to appear, the region
offers many old stone houses.
Prices for newly built houses are steady at –1,500 to –2,000 per square meter,
but local real estate agents believe a drop is on its way in the near future,
especially with regard to land plots. Renting a place in popular winter resorts
is another alternative for those who don’t want to spend a fortune on real
estate. Leasing terms may be per season or per year. For instance, on Mt
Parnassus, an 80-square-meter home may cost up to –800 per month, if rented for
the entire season, or up to –480 per month, if rented for the whole year.
Similar rent levels apply for places on Mount Pelion and in Kalavryta
(Peloponnese), but places can be found for half these prices in some other
areas, including Elati, Petrouli, Oreini Corinthia and Oreini Nafpaktia.
All in all, potentially interested parties may enjoy more benefits by opting for
slightly less popular winter resorts. There are many such highland resorts
around the country, and real estate agents believe they are still inexpensive.
For instance, Stymfalia and Kastania (in Oreini Corinthia) enjoy a good deal of
demand, with land (for development) sold at –59,000 per 1,000 square meters and
houses sold for –1,700 per square meter. Land parcels can be bought for even
less on Mt Olympus, especially in the Litohoro village area, with prices ranging
from –5,600 to –30,000 per 1,000 square meters.---------------------------------------------------------------------------------------------------------
10 December 2007 - Real estate is suitable for people targeting long-term
returns (Kathimerini Newspaper)
Investing in real estate is still regarded as a profitable and safe investment,
a conviction shared by the majority of public opinion, as shown by various
surveys and polls published in recent years. This confidence is confirmed by a
recent study conducted by the Statistics Faculty of Athens Economic University,
headed by professor Epaminondas Pannas. The study was presented during a recent
two-day meeting organized by Helexpo. It shows that investing in real estate is
suitable for people targeting long-term returns rather than quick profits, as
major price increases in recent years leave little room for further growth.
Real estate is still considered to be a safe haven for investors against
inflation. The study showed that investing in real estate is an excellent
defense against inflation for investors. The difference between the consumer
price index (CPI) and residential property prices in the period 2004-2007 was
estimated to be around 21 percent in the southern suburbs of the capital.
According to Pannas, «an investment valued at -100 in 2004 in a property located
in Athens's southern suburbs, returned -130 in 2007.
The average sale price per square meter in the southern suburbs stood at -2,733
in October, up 4.11 percent year-on-year. Returns per type of property (based on
floor area) are not especially high. Small apartments of up to 50 sq.m. have a
return of up to 4.0 percent, while flats up to 80 sq.m. return 3.39 percent.
Larger residencies from 121 sq.m. to 200 sq.m. cost -450,000 to buy, and their
return stands at 2.93 percent, calculated on an average monthly rent of -1,100.---------------------------------------------------------------------------------------------------------
22 November 2007 - First homes to be exempted from tax (Kathimerini Newspaper)
First-time home buyers will be exempted from taxes, except municipal rates, for
residences up to 250 square meters, Deputy Finance Minister Antonis Bezas said
yesterday.
“There will be a ceiling of 250 sq.m. that will be exempted from taxation, which
will be increased by 25 sq.m. for every child after the third,” he told a press
briefing at Alpha radio station.
Bezas said the single property tax will be paid for the first time in 2008,
replacing a multitude of existing levies, including the inheritance and parental
transfer taxes.
“These taxes will be abolished. The present tax-free ceiling will be retained,
above which the single property tax will be 1 percent. This will include
relatives of the first and second degree. These provisions will be included in
the bill on fuel taxation and distribution, to be tabled within 10 days at
most,” he said.
Separately, Economy and Finance Minister Giorgos Alogoskoufis said one day after
the tabling of the 2008 budget that the new provisions expanded the property tax
base. “Of the additional revenue of –6 billion envisioned in the budget, –4
billion is not new taxes but taxes that are due on higher incomes. The remaining
2 billion in new taxes we have calculated will come from fighting tax evasion,
particularly from the plan to equalize the automotive and heating diesel taxes.
The rest will come primarily from property taxation, which will be expanded, and
from a widening of the tax base,” he told Skai Radio in an interview.
The budget draft provides for total property tax revenues of –900 million, up
275 percent from this year’s projected –240 million.
Asked if his colleagues’ understanding had improved now, after the tabling of
the budget compared to their demands before, he said, “This is a universal
phenomenon in all countries before the budget is tabled. It is logical for every
ministry and minister to want ever greater budget credits, but in the end the
government, through collective processes, arrives at a budget draft which
reflects its priorities as a whole,” Alogoskoufis said.
Finally, he said the government will probably introduce the new, revised, table
of official property values for tax purposes in the spring.---------------------------------------------------------------------------------------------------------
5 November 2007 - Realty prices slightly up, buyers in waiting mood (Kathimerini Newspaper)
Property sales, in data collected and processed by Aspis Real Estate (ARE), a
chain of realty agents, are reporting satisfactory demand and a continued slight
rise in prices for newly built apartments in the first nine months of the year.
Between January and September 2007, ARE closed 795 property deals in the Attica
basin, regarding exclusively newly built apartments. In the same period last
year, the number of deals closed by ARE stood at 605, showing an increase of
31.4 percent in this year's property deals. Similarly, significant changes are
also apparent in sale prices.
Characteristically, the mean increase in prices for central Athens stands at
12.5 percent, with a similar rate recorded in the western suburbs, followed by
the northern suburbs with 12.3 percent and the southern suburbs with 11.2
percent. The rise in Piraeus stood at 9.0 percent and in eastern suburbs at 6.0
percent. Based on the above data, Aspis Real Estate has concluded that demand is
satisfactory and prices are moving up.
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4 October 2007 - House prices grow 105 pct in seven years (Kathimerini Newspaper)
The value of houses across Greece grew by 105 percent in the 1999-2006 period,
according to 32,000 assessments by four of the top Greek banks, while in the
center of Athens prices have soared by as much as 149.4 percent.
This is the latest finding of the real estate index Propindex, formed by
Property Ltd in association with the National Bank of Greece, Alpha Bank, EFG
Eurobank and Emporiki Bank. The index’s data were presented yesterday by the CEO
of Alpha Astika Akinita, Antonis Leousis, in the context of a conference
organized by Real Estate & Development magazine titled “Investing in
Destinations.”
The lowest rise in prices in the same period was recorded in the region of
Eastern Macedonia and Thrace, estimated at 62 percent. Leousis added that the
banks’ estimates converge in an average price per square meter, which in 1999
stood at 867 euros for flats and at 949 euros for detached houses. Seven years
later, these rates rose to 1,717 euros/sq.m. and 1,709 euros/sq.m. respectively.
Despite the oversupply of houses on the market, no decline in prices is seen for
this year and next. The conference also heard that the government’s moves to
lift some of the tax burdens and to abolish the transfer tax at least on a main
residence could encourage profiteering in the market in order to reap capital
gains.
The significant decline in interest rates combined with the high rate of
economic growth, the increase in population and the number of households and the
absorption of immigrants have been the main reasons behind the impressive
increase in prices on the local housing market.
“During 2006, the local market showed signs of tiredness, resulting in a
significant decline in demand. The imposition of value-added tax (VAT) along
with the rise in interest rates have led to the accumulation of many houses for
sale, creating an oversupply on the market. However this has not yet put any
pressure on sale prices,” said Leousis.
He did add that the actual entry of VAT into the market – as deeds under the new
tax status are still very limited – will bring about a fresh rise in prices,
albeit a small one.
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29 September 2007 - Low tax on rent income an added incentive for foreign
home buyers (Kathimerini Newspaper)
As the real estate market increasingly becomes a global activity, many
foreigners are starting to buy properties in Greece, particularly holiday homes,
seeing it also as an attractive investment. In recent years, hundreds of
thousands of holiday homes have been purchased by foreigners in many countries
around the world, particularly in SE Europe.
The recent collapse of Spain’s holiday home market has led to many potential
property buyers considering alternative locations, including Greece.
Although Greece’s holiday home market still has a long way to go in terms of
development, the country enjoys a significant tax advantage for foreigners
willing to treat a holiday home also as an investment. An increasingly popular
practice is to lease a home for the months it is not being used, e.g. in the
winter. But here an important decider is the level of the return minus the
amount of tax they would have to pay.
Greece ranks among the relatively “inexpensive” countries given that tax imposed
on income from rent is currently at 15 percent. This bracket applies exclusively
for foreigners and non-residents in Greece, who have no other source of income
here. The rate has been calculated on the basis of income from a monthly rent of
–1,500 or –18,000 annually. Excluding those states with zero tax, such as the
UK, Cyprus and Latvia, Greece is currently in 31st position among 75 countries
with respect to the amount of tax on rents.
On a global level, Switzerland – with a rate of 48.56 percent – levies the
highest tax on income from rents, and in cases where the monthly income from
rents is over –12,000, the tax rises to 54.5 percent. Along with Kenya and
Tanzania, which also charge high taxes on rents, the US is ranked in the top
three in the list of highest taxes, at 30 percent, a rate which also applies in
Russia, irrespective of the amount of income.
Spain, with a tax on rent income at 24 percent, Turkey with 14.61 percent and
Greece with 15 percent have been seeking to attract foreign property buyers, but
now a more decisive role will be played by the respective tax rates as
prospective buyers seek also some income from their real estate investment.
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4 September 2007 - No hike in Property VAT (Kathimerini Newspaper)
The government will not change the level of value-added tax or officially
determined property values (used for tax purposes), if re-elected next week,
said Deputy Finance Minister Antonis Bezas in a radio interview yesterday.
“There will be no need to readjust the ‘objective’ values as the market has not
taken its prices higher. We have reached a good level, close to market levels,”
said Bezas, adding that there is no plan to raise VAT, despite the many reports
to that effect.
In fact, sources say that objective property values may decline in the areas
that recently suffered wildfires (Evia, Ileia, Arcadia, Messinia and Laconia),
to reduce the tax burden on local taxpayers in case they transfer their
properties and due to the decline of the market values of those properties.
Objective values in those areas may even fall by 30 percent.
Bezas said that the only plans the government is working on as concerns taxation
include tackling the illegal fuel trade and a simplification of property
taxation with the abolishment of the various taxes burdening real estate.
The ruling New Democracy Party has suggested it intends to merge most of the
taxes imposed on real estate. The new tax will concern all properties
(buildings, fields, plots) regardless of whether they are used as a main,
secondary or holiday home or whether they are rented or empty. It will be annual
and calculated with the application of a special coefficient on the objective
value of the property. The taxes to merge are the Large Property Tax, the real
estate levy and the tax for buildings with electrical supply. It will also
incorporate the supplementary tax on incomes from properties, the tax for living
in an owned house and possibly other levies imposed by local authorities.
The government also intends to abolish the estate (heir) duty from next year.
Under the existing legislation, the tax-free ceiling for property inheritance
from a first-degree relative stands at –95,000, according to the objective
value. For properties valued up to –120,000, the duty is –1,250 and for
properties worth up to –265,000, the duty is –15,750.
Referring to the course of the budget revenues, Bezas stated that “August
revenues have been very good and are raising the total rate of revenue inflow
above the target we had set.” Revenues are showing a growth rate of 6.5 percent,
while the budget’s target had been 5.5 percent. This positive development is
attributed to revenues coming from the 15 percent increase in VAT.
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23 August 2007 - Record number of people leave UK (BBC)
More people left the UK last year than in any year since current records began
in 1991, statistics show.
Figures from the Office for National Statistics (ONS) indicate that some 385,000
people left the UK for the long term in the year to mid-2006. Many of those
leaving were "long-term migrants" and not British citizens. Long-term migration
into the UK, meanwhile, was 574,000. The figures show the UK population grew to
60,587,000 - an increase of 349,000.
The majority of those are people who came in from Eastern European countries in
May 2004 - what we call the A8 countries - and I think what the figures suggest
is that, maybe we're now capturing more of those people going home [in the
statistics]," Professor John Salt told BBC Radio 4's PM programme.
The latest figures available from the ONS for the most popular places among
emigrating Britons show that [from January 2004 to December 2005] Australia was
the number one choice. Those figures - published in April - suggest that, over
that two year period, 71,000 British citizens started new lives in Australia
compared with 58,000 in Spain and 42,000 in France. Dean Morgan, of the website
workpermit.com, said the bad summer weather had led to a large number of
inquiries about emigration.
"Normally in July and August time its quite quiet but this year we've been
inundated," he told BBC News. "Perception of crime is another of the main
reasons for people wanting to leave," he said."Also, people are worried about
their children and they worry about their jobs and their future here and
possibly the economy as well."
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14 August 2007 - Mature buyers realise gains from overseas homes (HiFX)
The number of British investors downsizing and selling their holiday home, then
repatriating money to the UK, has doubled in the past year according to foreign
exchange company HiFX.
The FX firm, which manages the transfer of over £100million back to the UK each
year, has seen a 100% increase in the number of Euro back to Sterling
transactions in the last 12 months. The majority of these transactions are
people sending money back from Spain and France to the UK. The average age of
those repatriating is 55 and over.
In Spain, 67% of Brits sending Euros back to the UK are aged over 55. One in
five of those repatriating money from France are aged 65 and over while 77% of
repatriates are aged 55 or above. “The overseas property market really took off
about 20 years ago when the first wave of Brits started looking for their dream
home in the sun - particularly in France and Spain,” said Mark Bodega, marketing
director for HiFX. “These two countries were the first overseas property markets
to truly mature and people buying there have matured with them. This is the
first time that we’ve really seen the impact of an ageing holiday home owning
population,” Bodega added.
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18 June 2007 - Greece’s holiday housing potential remains untapped (Kathimerini Newspaper)
Economists and other experts have long argued that sustaining Greece’s strong
economic growth rates into the future and tackling the country’s social security
problem may be the biggest challenges facing policy makers. This task could be
made much easier by turning Greece into the “Florida of Europe.”
Greece can count on some –20 billion in European Union structural funds up to
2013, in addition to more than –24 billion during the 2000-2008 period to keep
its economy on the path of 3.8 to 4.2 percent in annual growth rates. But this
may not be enough if the cost of money for consumers and business gets more
expensive as the European Central Bank keeps raising its intervention interest
rate, currently at 4.0 percent, and some major EU economies experience a
slowdown. However, unlike other countries, Greece can add to the firepower of EU
structural funds in the years to come provided its policy makers talk less and
do more to accommodate the strong demand for second homes in the country from
abroad.
Baby-boomers - It is no secret that many baby-boomers, that is, people
who were born after World War II, from Northern Europe are seeking a quality
second place to live on the sunny Mediterranean as they go into or approach
retirement. Moreover, a number of younger tourists from northern and eastern
Europe are looking for summer vacation homes. According to real estate
executives, the demand for second homes from foreigners could reach 1 million
units in Greece in the next several years. Assuming an average cost of –120,000
per home, the country can look forward to some foreign direct inflows (FDI) of
up to –120 billion over the same period. Even if that takes 12 years to
materialize, this translates into some –10 billion per year on average.
This a huge amount by all means and there is little doubt it would help to
sustain Greece’s 4.0 percent growth rate and even boost it further. It is easy
to understand why this is likely to happen. First of all, private residential
investment is going to rise to accommodate demand. Secondly, house and property
values in general are likely to rise as well. The house price increases are
going to boost the earnings of real estate development companies, engineers and
others working in the construction business, leading to further investments.
The overcrowded summer vacation market argument for France, Italy and Spain,
Greece commands a 10 percent market share of the Mediterranean tourist industry.
This by no means translates into a comparable figure for the purchase of summer
vacation homes by foreigners. According to the data, Greece has sold just 50,000
homes to foreigners in the last 12 years, compared to 4 million units on the
Iberian Peninsula. Some 10 million summer vacation homes have been sold in
France, Spain, Italy, Portugal, Turkey and Cyprus. So, Greece’s problem is not
the lack of demand from northern – and increasingly eastern – Europeans,
particularly the Russians. The country’s biggest problem is that it does not
have enough of the product to satisfy the demand. To be more specific, Greece
does not offer enough modern summer vacation houses in organized housing
complexes in wonderful areas complete with all the facilities and easy access to
nearby hospitals, airports and ports.
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14 May 2007 - Spanish property lessons (Kathimerini Newspaper)
Spain, a country that enjoyed impressive growth in real estate prices during the
past 10 years, in a way that is similar to the growth pattern of Greece’s
housing market, now appears to be in the grip of fears over a likely collapse of
the property market.
These fears have been fuelled by a sizeable liquidation of shares in
construction firms and banks during the last few days, in the wake of signs that
the European Central Bank (ECB) is preparing to increase its interest rates. In
addition, excessive house supply and record-high mortgages are driving Spain’s
property market into recession.
Approximately 4 million foreign owners of property in Spain – mostly Britons and
Scandinavians – are concerned about their properties losing value. A number of
construction groups operating in Greece’s holiday house market have already
received hundreds of real estate purchase requests by foreigners wishing to
leave Spain, driven both by the recent negative market developments and
excessive building activity in once idyllic locations along the country’s
southern coasts.
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24 April 2007 - Money worries tempt OAPs to up sticks for new
life abroad (Scotsman Publications Ltd, UK)
Pensioners are leaving Scotland in record numbers to escape
escalating taxes and inflation, new figures have revealed.
The number of Scots claiming their pensions from abroad has soared
by almost a third in the past decade to 95,000.
Australia tops the table as the most popular retirement
destination, with Ireland and Spain also popular. The number moving
abroad is expected to rise to 300,000 by 2050, and overseas
property experts believe the growing trend is the result of
increasing living costs, primarily associated with the council tax.
Owen Small, of Overseas Emigration, Scotland's only registered
emigration agent, said: "We've seen a big increase in the number of
pensioners looking to emigrate. A large proportion say it's purely
down to finance. "Many people who contact us are fed up with
Scotland. They say the country is going down the tubes and that
they don't see any future here."
One recent poll found that a third of those reaching retirement age
planned to move abroad, and financial worries are believed to be
one of the most influential factors in making the move.
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22 April 2007 - A nightmare in Cretan sun - and the man we blame
is English (The Mail on Sunday)
 You may might think that it a whole lot simpler to buy a property
overseas through an English company, especially one run by a man
who appeared on Channel 4's [UK TV program] 'A Place In The Sun'.
For dozens who did just that and bought in Greece through Crete
Traditional Homes, however, the process has been a nightmare. They
claim building has be delayed by years, half finished homes have
been flooded, workmanship has been farcical and sometime dangerous,
and workers have not been paid.....
Full article by The
Mail on Sunday
(ALWAYS use an independent lawyer when purchasing property and
NOT one appointed by the development company)
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11 April 2007 - Buying abroad - not so taxing (Assetz
Property News Service)
Many of us foster a dream of owning a property abroad, yet so few
of us relish the prospect of paying a large amount of tax to make
our dreams a reality.
However, Gordon Brown may have done overseas property investors a
big favour in his most recent Budget, with the revelation that UK
tax will be ended on property bought through a company. This method
of purchase, which many Britons may find to be preferable, will no
longer be subject to the benefit-in-kind tax - which experts have
hailed as good news for investors.
Under the current system, Britons can purchase a property as a
director owning shares in the home in order to circumnavigate local
inheritance tax laws, as the shares can be passed on to offspring
after death. However, an annual tax has been applicable in the UK,
which is now set to be scrapped from 2008.
He added that people who have already bought houses will find that
they can retrospectively claim back money from the UK Inland
Revenue - a move sure to raise the popularity of purchasing a
property overseas.
Find.co.uk, a financial services expert, recently claimed that
purchasing a property through a company has other tax-break
benefits, including paying less on rental incomes and the avoidance
of capital gains tax and stamp duty.
Inheritance tax, which caused many Britons to fall foul of
benefit-in-kind tax, has long been one of the more reviled and
resented forms of taxation - after a lifetime of hard work many
view it as unfair that the government should get their hands on a
share of what they choose to leave behind. Last month, IFA
Promotion claimed that poor financial planning was leading Britons
to pay a collective £1.5 billion more than was necessary in
this tax.
(Consult and independent tax advisor for more information)
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23 March 2007 - Profitable house investments
(Kathimerini Newspaper)
Traditional homes in villages off the beaten path are cheap with a
significant upside potential when restored. Buying an old house in
a village, especially if the village is located near a tourist
attraction or resort, can be a good investment. These houses often
come cheap and, if restored in their traditional form, can have, on
the upside, significant appreciation. Such houses are being bought
in large numbers in recent years, mainly by foreigners but also by
Greeks.
In many tourist areas, construction companies focus on the most
popular spots, thus creating a supply shortage in nearby, quieter
areas, for which there is especially high demand, usually from
foreigners. With the cost of a newly built holiday home rising
rapidly, many are opting for older houses, even high up in the
mountains. The cost of buying and refurbishing such houses remains
significantly lower than buying a new one.
Lately, a lot of money has been invested in large holiday house
complexes in places such as Crete, Rhodes and the Messinia
prefecture in the south-western Peloponnese. These projects,
however, are still far from complete, leading many buyers, and
still others who prefer quieter places, to look into houses in
Greek villages. Some among the prospective foreign buyers own
property in Spain, in resort areas that have now become heavily
built up.
"There are many groups of people, especially Germans, who are
looking to buy and restore groups of houses, around 20-30, in
abandoned villages", says a real estate professional.. "This has
already been done in Tinos. But there are several opportunities in
places such as Mystras (an abandoned medieval settlement near
Sparta) and elsewhere in the prefecture of Laconia", he adds.
---------------------------------------------------------------------------------------------------------
3 February 2007 - Prices for new houses keep rising
(Kathimerini Newspaper)
The average price of a newly built apartment in Attica is now more
than –2,000 euros per square meter, according to the latest
price data from the market.
In most areas the lowest market prices for new houses start from
–1,600/sq.m. and reach –2,500/sq.m., not including
high-priced areas such as Palaio Psychico, Kefalari, Kolonaki or
parts of the southern suburbs such as Vouliagmeni, Voula and
Kavouri. The relatively few new developments in those areas go
beyond what the average Greek household can afford, as their prices
start from –3,500/sq.m. and could rise to
–7,000-8,000/sq.m.
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23 January 2007 - Single real estate tax (Kathimerini
Newspaper)
The government is planning to impose a single annual property tax,
promising owners that it will merge or abolish a patchwork of taxes
imposed today, some of them through local authorities. "In the
third stage of tax reforms, various taxes on real estate property
will be substituted by a single low tax. This will allow for the
simplification of the system and the lightening of the load for
property owners," said Economy and Finance Minister Giorgos
Alogoskoufis.
The competent Finance Ministry departments have submitted their
proposals to the minister for the application of a single tax on
real estate, to include such taxes as the Large Property Tax and
the real estate levy. It will also incorporate the additional tax
on income from properties, the owned residence tax and possibly
various other taxes imposed by local authorities. The general aim
is that taxation becomes more fair, broader and that the
distortions created by the selective imposition of tax be
reduced.
The single tax will have a relatively low rate so that the tax
obligation can be covered by taxpayers’ incomes, without
forcing them to liquidate some of their properties to pay for the
tax. There will also be tax-free ceilings, depending on the size of
properties owned or the income of each taxpayer.
Today all taxpayers have to pay various taxes imposed on real
estate, and not just those who own large properties. Property taxes
affect both owners and tenants who pay the real estate tax through
their electricity bills.
The new tax, according to a high-level ministry official, will be
based on the so-called objective value of every property, that is,
the price determined by the state for tax purposes. The rate to be
used may well change depending on the area and on the size of each
taxpayer’s overall property ownership. Small objective value
properties may be exempt from the single tax.
The ministry’s aim is to help the property market remain
flexible and to smooth long-term negative impressions that dissuade
foreign investors from investing in Greek properties, as well as to
curb tax evasion.
---------------------------------------------------------------------------------------------------------
23 December 2006 - VAT hits housing market (Kathimerini
Newspaper)
This year has been more or less quiet in the housing market, as was
expected after a turbulent year 2005 due to the dramatic changes to
the tax status of real estate, and mainly the imposition of
value-added tax to newly built properties. The property market is
entering a stabilization period, with clear indications of a
slowdown in the growth rate of prices on global level. Local and
international analysts believe that this course will continue
throughout 2007, so that with the help of the interest rate rise,
the smooth landing of the housing market will eventually be
affected. Constructors and estate agents show their satisfaction in
saying that once more the pessimistic theories that emerge at times
– referring to a market freeze and a decline of prices
– have been proven wrong.
Prices now tend to remain at the high levels of last December. The
general picture shows several local variations, depending on the
population’s financial status, the supply, the mobility of
households and the local town-planning features. A recent survey
presented by the "Yiannoulelis & Associates" estate agency has
recorded a stability in prices, with several areas actually showing
a price drop, returning to the December 2005 levels. The decline in
prices is mainly observed at the northern and northeastern suburbs,
the broader Athens city center and the western suburbs, while the
southern suburbs and eastern Attica maintain their prices.
In older houses, demand peaks at the expensive northern and
southern suburbs, where new house prices have skyrocketed. On the
contrary, in the comparatively cheaper or developing areas the
demand for older houses is low, Aspis adds.
---------------------------------------------------------------------------------------------------------
15 December 2006 - Demand hikes house prices (Kathimerini
Newspaper)
The Greek residential housing market will remain one of the
economy’s driving forces, supported by demographic
developments, according to a study by the National Bank of Greece.
The report estimates that in 2007 and 2008, the increased supply of
houses, due to the explosive growth in house construction permits
in 2005 (+50 percent annually), and its maintenance on high levels
this year, will continue to enter the market gradually. Given
this paced adjustment in supply and the estimates that the rise in
real per capita income will exceed 3 percent in the next two years,
that real interest rates will increase by about 50 base points from
their current levels and that the growth rate of new household
formation will remain at 1.5 percent per year, demand for houses
should continue to be strong. The strength of demand will allow for
the maintenance of the contribution of housing expenditure in
economic growth at 0.7 percent in 2007 and 2008, against 0.9
percent in the 2000-2005 period. The rise in real house prices in
2007-2008 should temporarily slow down to 2-3 percent annually, due
to increased supply, before rebounding to 4.2 percent in the
2009-2015 period.
The National Bank of Greece’s study further argues that the
total impact on economic activity, both through the increased
construction activity and through the effects of property
valuations in consumption, is estimated at 0.8 percent in the next
two years, remaining much higher than the eurozone’s rate
(0.4 percent in the last six years).
The housing market has for years been an important engine for the
Greek economy, contributing about 1.3 percent to its annual growth
rate in the 2000-2005 period. This effect is primarily realized
through investment in houses and the impact of the change in the
value of properties in the consumption expenditure of
households.
Reflecting the strong demand for houses, the real prices of houses
have grown by an average 9.3 percent per year between 2000 and 2005
– a rate considerably higher than the eurozone average. They
have resulted in the rise of property value for households by 20
percent in the same period, reaching today 650 percent of the
country’s gross domestic product (GDP).
---------------------------------------------------------------------------------------------------------
29 November 2006 - New tax rates for property (Kathimerini
Newspaper)
On January 1, the government will announce the new adjustment to
the officially determined values of properties depending on the
area (used for tax purposes and known as "objective prices"),
Economy and Finance Deputy Minister Antonis Bezas said yesterday.
The adjustment concerns all properties, whether within town
planning or outside it, and is the follow-up to last winter’s
adjustment. The government has stated it wants to raise objective
prices gradually, within a three-year period that started in
2006.
The gap between objective and market prices remains wide,
particularly at minimum rates. At Perama, in Piraeus, the minimum
zone rate was at 600 euros per square meter last year, while in the
market it stood at 1,500 euros/sq.m., that is, a 150 percent
difference. Another candidate for adjustment is Haidari, in western
Athens, where the minimum zone rate is now at 750 euros/sq.m.,
while the commercial value starts from 1,800 euros/sq.m.
---------------------------------------------------------------------------------------------------------
14 October 2006 - Greece’s interest rates top eurozone
(Kathimerini Newspaper)
The cost of money in Greece is the second highest in the eurozone
for home loans with floating interest rates, according to data
released yesterday by the European Central Bank (ECB).
According to the survey, the cost of financing a property in Greece
with a floating rate reaches 4.51 percent. The only country in the
12-nation bloc to have a higher charge than this is Germany, with
5.12 percent. The same loan in Luxembourg, Finland and France is
offered below 4 percent, according to the ECB. In an economy that
has been experiencing strong loan growth in the last few years, the
high interest rates raise questions about the efficiency of the
banking market despite its development in recent years.
A series of rate hikes by the ECB so far this year have been
largely passed on to loan holders, particularly those whose
interest rates are not fixed. Some 80 percent of home loans in
Greece have been obtained on a floating-rate basis. The banks,
criticized for not fully passing on rate hikes to deposit products,
have rejected accusations that they have adopted abusive practices
against their customers. Banks argue the rate spread - the
difference between the interest paid on deposits and that charged
for loans - is larger in Greece than in other countries due to the
small size of the local market and the country’s low credit
rating.
---------------------------------------------------------------------------------------------------------
29 September 2006 - Property prices go up although demand for
new properties has fallen by as much as 50 percent this year
(Kathimerini Newspaper)
Despite a drop in demand, prices of new houses such as those
outside Thessaloniki have increased significantly this year and may
become even higher as the government readjusts objective values.
House prices increased significantly in early 2006, both in Athens
and in other Greek regions, according to data provided by market
experts and the central banks. The Bank of Greece announced
yesterday that house prices outside Athens increased 13.4 percent
in the first quarter of 2006, compared to the same period last
year. Big real estate agencies estimate that prices in Athens have
increased at about the same pace. Over the past five years, house
prices have increased 30.5 percent in Athens and 50 percent in
other Greek regions. But Athens prices witnessed a boom just before
this period, especially between 1999 and 2002. Overall, house
prices in Athens have risen 164 percent in the past decade. Real
estate professionals estimate that contracts to acquire new houses
have dropped 50 percent so far this year. A comparable decline has
hit transfers of older properties. Experts attribute the decline to
changes in taxation, such as the raising of the so-called
“objective value” used to assess property taxes and the
introduction of value-added tax (VAT) on new construction from last
January 1. Changes in taxation spurred demand toward the end of the
previous year, leading to this year’s decline. However, the
decline in demand has not been accompanied by a parallel drop in
the prices of new buildings.
---------------------------------------------------------------------------------------------------------
8 September 2006 - The European Union want to make it easier for
home buyers to get the best mortgage deal they can get, even if it
means turning to lenders in another country in the 25-member
bloc (Athens News)
It pays to shop around before you buy a home, whether it's your
first or fourth. But it's just as important to find the best
residential mortgage deal for your needs.
There is already a wide range of loan options available to Greek
borrowers, but there could soon be more. New plans being considered
by the European Commission will allow European homebuyers to take
advantage of cheaper mortgage rates available in other European
Union countries. "A home is a big purchase and the mortgage credit
markets are a very significant part of the EU economy," says
European Internal Market Commissioner Charlie McCreevy. "More
cross-border activity and competition in the EU mortgage market
could increase choice, reduce costs and leave more money in
people's pockets at the end of the month."
This is why the European Commission published a green paper
proposing the integration of the 25-member bloc's residential
mortgage credit market. Specifically, the commission is proposing
an EU-wide standardisation of mortgage credit terms. Another
suggestion is the creation of a so-called Euromortgage - an EU-wide
mechanism for issuing loans on property. "For most EU citizens, the
purchase of their home represents the largest purchase in their
lifetime", says the green paper, which was discussed in Brussels.
"Most home purchases require a loan... This debt is likely to be
the most significant ongoing financial commitment for most EU
households."
According to the European Commission, a more efficient and
competitive mortgage credit market could result "through greater
integration [and] could contribute to the growth of the EU
economy". The commission says this "has the potential to facilitate
labour mobility and to enable EU consumers to maximise their
ability to tap into their housing assets, where appropriate, to
facilitate future long-term security in the face of an increasingly
ageing population".
---------------------------------------------------------------------------------------------------------
5 September 2006 - Property developers turn to holiday home
sector (Kathimerini Newspaper)
The holiday home market is one of the most attractive domains in
local real estate, sporting significant scope for growth. The
country’s natural beauty, combined with the mild climate,
make Greece an ideal destination for those seeking a place in the
sun, particularly for pensioners from Central and Northern Europe.
In view of these positive prospects, Greek property development
companies and subsidiaries of construction groups are turning
toward developing organized complexes of holiday houses to offer an
attractive and quality product that the Greek market did not have a
few years ago.
Crete, the country’s biggest island, is predictably the focus
of construction interest for the development of such complexes and
holiday units. The biggest investment taking place on the island at
the moment, despite several difficulties, is by British company
Loyalward, and reaching 700 million euros. The story of that
investment began back in 1998, with the utilization of the 26
square kilometers belonging to the Toplou Monastery. Eight years
on, the company states it has secured most of the permits required.
Its plan provides for the creation of hotel units, conference
installations and golf courses as well as four
“villages” of 360 inhabitants each, addressed to
customers from Northern Europe.
Another major investment on the island of Crete is by Iktinos
Technical and Touristic on a plot of 1.8 sq.km belonging to the
Faneromeni Monastery. This, too, has come up against many
obstacles: After five years of trying to obtain the permits
required, Iktinos is now optimistic it will begin construction. The
investment will reach 120 million euros, including the construction
of a hotel unit, a marina, two housing areas and some golf courses.
The first stage of the investment (65 million euros) spreads over
492,000m2. and provides for a five-star hotel with a 500-capacity
conference centre, along with a spa, a marina for 85 boats and a
village with 300 luxurious villas and a shopping centre. The first
stage will be completed at end-2009, while the second also includes
the development of two 18-hole golf courses.
Crete will further host the second project of J&P Development
in the holiday home market, as the company has acquired a plot of
4,700 sq.m. just outside Hania, at Pirgos Psilonerou. This holiday
house complex will be just 15 km from the city of Hania and 30 km
from the airport, which makes it a very good choice even for main
residences.
Cypriot firm Cybarco Property Development, too, has invested in the
Hania prefecture, in the area of Maleme. The company has completed
a complex of 24 holiday homes totaling 2,000 sq.m. on a plot of
3,500 sq.m. Most of the houses have already been sold. The complex
consists of eight maisonettes (ranging from 247,000 to 309,000
euros) and 16 apartments. The same firm has constructed another
five seashore villas at Kalathas, near Hania, all of which have
been sold.
---------------------------------------------------------------------------------------------------------
2 September 2006 - Real estate market is now more attractive to
foreign investors - Increasing transparency and tax reform the main
factors, say the experts (Kathimerini Newspaper)
The image of real estate in Greece has improved so much that it now
figures among investors’ choices for a decent placement in
the European property markets.
It wasn’t always this way. Greece had long been a
no-man’s land for foreign institutional investors because of
the unclear legal, tax and town-planning framework and the lack of
an appropriate or attractive product to persuade investors. Now
many things have change for the better. The law about property
investment companies has improved. Value-added tax has been
introduced on newly built constructions. The local market’s
transparency has improved, as has the information flow. These
changes have created an attractive product for investors, say
market professionals and consulting company expert.
"It is true that the Greek property market has recently changed
regarding its investment dimension and slowly but steadily it is
obtaining the characteristics of a mature market", said Dika
Agapitidou, general director of the Athinaiki Economiki firm that
represents Jones Lang LaSalle in the Greek market.
---------------------------------------------------------------------------------------------------------
27 July 2006 - Foreign investors find Greek commercial property
increasingly attractive (Kathimerini Newspaper)
International investment funds, armed with ample liquidity, have
been showing increased interest in Greek malls in the last 12
months. This is not surprising; the Greek market may be relatively
small but its consumers are avid spenders; moreover, return on
investment is fully satisfactory.
Real estate market players argue that the increasing flow of
foreign investment in Greek commercial property is a logical
development and is not the result of some sudden love affair. At a
time when investment opportunities in Central and Eastern Europe
are drying up and consumer profiles and spending power in the other
Balkan countries are still weak, Greece seems an attractive
alternative.
---------------------------------------------------------------------------------------------------------
21 July 2006 - House prices on the rise (Kathimerini
Newspaper)
An additional 10 percent rise in house prices is possible due to
the imposition of value-added tax (VAT) on new buildings, combined
with the new adjustment of prices officially determined for tax
purposes, according to a survey by the Athens University of
Economics and Business. The survey, which analyses expectations for
the real estate market for the second half of the year, has found
that 61 percent of respondents expect the imposition of VAT to
raise the prices of houses between 5 and 15 percent, averaging in
at 10 percent.
---------------------------------------------------------------------------------------------------------
15 May 2006 - Property rates (Knight Frank residential
research)
Greek house prices rose by 7.9 percent in the first quarter of
2007, a recent report by international property consultancy Knight
Frank suggested, against a global average of 6.1 percent. Greece
stands 13th in the world in price increases, having ranked 20th in
the Q1 of 2005 with 4.2 percent. The report suggests that the world
wide housing market is entering a consolidation stage with house
price rises generally slowing down. The worst country is
Serbia-Macedonia (Belgrade) reporting a -10.3% drop in house values
for Q1 of 2006.
---------------------------------------------------------------------------------------------------------
9 May 2006 - Credit growth hits 30 percent in the first two
months of 2006 (Kathimerini Newspaper)
Greek households snapped up home and consumer loans at a fast pace
in the first two months of 2006 as credit growth jumped by about a
third, according to Bank of Greece (BoG) data released yesterday,
while more than 60,000 loan holders are struggling under the weight
of their debts. The BoG, the country's central bank, said in a
report that at the end of February, Greeks owed financial
institutions 71.3 billion euros, 30 percent more than in the same
period a year earlier. Mortgages shot up 33.6 percent, in
comparison with the same period a year earlier, reaching 47 billion
euros. Consumer credit also grew strongly, rising by 28 percent to
22.6 billion euros. Loan growth in Greece has remained strong
despite widespread expectations of a slowdown at the start of 2006.
The introduction of tax on newly built homes and higher tax values
on real estate has done little to dampen the buying appetite of
homeowners.
---------------------------------------------------------------------------------------------------------
2 May 2006 - Property prices set to fall in 2007
(Kathimerini Newspaper)
Real estate professionals are expecting a sharp decline in demand
for property and, therefore, a drop in prices beginning in
2007.
They estimated that the already implemented changes in property
taxation and the expected rise in interest rates will lead
potential buyers to postpone their plans to see how things turn
out. Not even small construction firms have been able to evaluate
precisely the extra cost the introduction of value-added tax (VAT)
has brought on new construction. Since January 1, 2006, when VAT
was introduced, only a few dozen building permits have been issued,
precisely because of the prevailing uncertainty, while the first
houses whose prices will include the VAT are expected to be ready
in 2007.
---------------------------------------------------------------------------------------------------------
14 April 2006 - High mortgage growth (Kathimerini
Newspaper)
The growth of mortgage lending over the first quarter of 2006 has
surprised even the most optimistic observers. Against forecasts for
a considerable slowdown, the start of the year has proved more than
impressive.
According to data compiled by the Bank of Greece, mortgages rose in
January by 33.5 percent year-on-year, reaching 46 million euros.
Bank officials note that figures from February and the first days
of March point to an even greater increase. The change in
officially determined values of properties and the imposition of
value-added tax (VAT) on new constructions as well as the rise in
interest rates do not seem to have made a big impact on households,
which keep on buying property. The momentum of mortgage credit for
this year will force banks to revise their estimates upward.
Banks’ initial forecasts referred to a 25 percent increase in
mortgages, translating into new loans of 10.6 billion euros.
However most banks now estimate that the growth rate will reach 30
percent in 2006, with some going as far as expecting a 35 percent
rise.
General conditions should be taken into account: In the last three
years the Athens stock market has shown a steady northward course,
resulting in high capital gains for some and a way out for many
investors trapped by the 1999-2000 crisis. Some of this cash flow
is being directed into the property market which in recent years
has offered great returns and without unwelcome ups and downs in
property prices. Despite the recent second rate rise by the
European Central Bank, euribor remains very close to historic lows,
rendering capital borrowing very attractive. However, the rise in
interest rates and the prospect of their further increase do scare
households, especially those who have taken out mortgages. Banks
are therefore turning their communication ammunition toward
fixed-rate loans. Although the burden for households from the first
wave of interest rate hikes is limited, the psychological impact is
far greater. The prospect of rates rising in the coming years and
the risk of a great increase in the monthly instalment to repay a
mortgage create major uncertainty. This allows for a new field of
activity for banks: One after another they announce new fixed-rate
loans with more favourable terms — that is lower rates
— so as to attract new borrowers and tempt those who have
already taken floating-rate loans into the “security”
of fixed-rate ones.
---------------------------------------------------------------------------------------------------------
29 March 2006 - VAT effect on house prices (Kathimerini
Newspaper)
Exemption for first-time buyers is expected to be widely
circumvented. House prices are not projected to see the effect of
the imposition of Value Added Tax (VAT) on new constructions before
2008, when the houses built under the new system are delivered,
realtors say. It seems that despite the exemption of first-home
buyers from VAT, which was introduced on January 1, 2006, the
distinction between primary and secondary residences will gradually
fade and all buyers will be burdened.
The constructors, who have to pay the tax, are expected to pass it
on to buyers. Furthermore, some expenses are exempt from VAT once
the receipts are presented, such as for materials purchased, saving
constructors some money.
Through the imposition of VAT, the government has aimed at
increasing tax revenue, but most importantly, it is targeting the
extensive tax evasion in the construction sector. Nevertheless,
constructors selling a house as a main residence will not escape
paying VAT, as this would be subject to property transfer tax
rather than VAT. As a result, constructors say that any VAT paid in
the purchase of materials will be passed on to house buyers,
burdening them significantly. This practically means that main and
secondary residences will have the same cost, while main residence
buyers will have to pay transfer tax as well.
---------------------------------------------------------------------------------------------------------
1 March 2006 - Mortgage loans are continuing to grow at last
year’s pace (Kathimerini Newspaper)
Mortgage loans are continuing to grow at last year’s pace in
2006, despite forecasts of a downturn. Bank sources suggest that
new housing loans recorded in January a 30 percent increase from
the same month last year, which is similar to the average growth in
2005. This dynamic start is revising northward the banks’
assessments about the course of mortgage credit in 2006. High-level
bank officers now believe that this year the rapid growth rates
will be maintained, as the property market will barely be affected
by the imposition of value-added tax (VAT) and the increase in
official property values (known as “objective”) that
are used for tax purposes. The reason for this trend is that anyone
who secured a building permit before December 31, 2005 is not
affected by those measures. Given that constructing a house
requires at least 12 months, this year’s mortgage growth will
only suffer a minimum effect by the new measures. Bank executives
estimate that a clearer picture of the consequences of the new
measures on the real estate market will emerge after the summer.
New building permit data for 2006 are also eagerly anticipated.
---------------------------------------------------------------------------------------------------------
2 February 2006 - Mortgages slow down but will
have a way to go (George Georgiopoulos - Reuters News
Agency)
Greece's mortgage lending boom is likely to slow from last year's
torrid pace of growth but still be strong enough this year for
Greek banks to increase profits again. Mortgage lenders enjoyed a
bumper year in 2005. The market has grown since Greece abandoned
the drachma to join the eurozone in 2001. Borrowing became
affordable, boosting demand and driving property prices up. "The
reason behind the increase in home prices in Greece has been the
dramatic fall in real interest rates from about 10 percent to 1
percent,» said Gikas Hardouvelis, chief economist at EFG
Eurobank.Builders and home buyers also rushed in last year to avoid
a 19 percent value-added tax on new construction that became
effective in January. Even after the new tax, analysts say growth
in mortgage lending still has a way to go, promising earnings
growth for Greek banks this year. After an amazing run in 2005, we
should see some slowdown this year but still a healthy pace", said
Costas Xenos, head of research at Egnatia Finance.
Bankers also convey this outlook - a deceleration to above 20
percent (growth in mortgage lending) from 33 percent in 2005, he
added. That should help support bank share prices, which have risen
36 percent since January 2005. Economists say population growth
resulting from an increase in immigrants and a shrinking average
household size translate to more potential home buyers in the years
ahead. Equally important, they say, is the prevalent perception
that property is a safe investment, with eight out of 10 households
expecting prices to continue rising in the next 12 months despite a
strong appreciation in the past decade.
Mortgage boom
"The fact that the majority of households consider
property a long-term investment means the speculative factor is
much smaller compared to other markets like stocks", Hardouvelis
said. "A possible price correction in real estate is not expected
to lead to mass sales of property as supply is rather
price-inelastic", he added. Based on the latest data from the
country's central bank, mortgage lending was running at a 27.4
percent annual pace as of October and is likely to have accelerated
further in the last months of 2005. It was a key driver behind
Greek banks' strong earnings for the first nine months of 2005.
Full-year figures are due later this month. National Bank's 87
profit increase was boosted by a 27.4 percent rise in its mortgage
lending. Likewise, EFG Eurobank's 54 percent earnings jump was due
mainly to a 34.8 percent expansion in mortgages and consumer loans.
"We expect mortgage growth to slow... but still support (banks')
revenues and net interest income", said analyst Costas Sinanidis at
Investment Bank.
Net interest income generates about 70 percent of Greek bank
earnings. For 2006, Citigroup forecasts that Alpha Bank is likely
to increase earnings by 23 percent and National Bank by 25 percent.
Alpha Bank currently trades at about 12.5 times its forecast 2006
earnings and National Bank at 13.7 times, Citigroup calculates.
That compares with an average price at 11.77 times forecast
earnings for banks in the Dow Jones Stoxx European bank index,
according to Reuters data.
Based on a January survey by pollster Metron Analysis, 2 to 8
percent of Greek households intend to buy or build homes this year
and 4 to 18 percent in the next five years. The data compare well
with the last two years, when about 5.2 percent bought property.
Most analysts agree that new construction and associated mortgages
from building permits obtained in 2005 should pass on to 2006,
absorbing some of the decline from last year's front-loaded demand.
"The financing of the increase in building permits witnessed in
2005 should support credit expansion this year, offsetting to a
certain extent a potential slowdown from higher taxes", Sinanidis
said.
---------------------------------------------------------------------------------------------------------
21 January 2006 - Stable Property Rates -
(Kathimerini News)
The convergence of market prices with the so-called
“objective values,” i.e. those used for tax purposes to
determine the value of a property, will be made gradually, assures
the Economy Ministry, clarifying that in 2007 a new rise of the
objective values and a greater burden for taxpayers must be
expected. The threat of increased taxes in 2007 combined with the
higher supply of houses where value-added tax (VAT) is not imposed
are the two main arguments of those who predict that this year will
be dominated by price consolidation in the current high levels and
by an undoubtedly lower demand compared to 2005.
Virtually everyone in the property market brands last year’s
high demand as artificial, indicating that this market is always
upset when objective values are about to be adjusted. At least this
year the confusion and nervousness of 2005 are not expected to
continue, as consumers are now aware about the changes in taxation,
while the current prices do not allow for a new rally.
Within 2005 the rise in housing prices at flats with high demand
(80 to 100 square meters) is estimated at an average of 15 to 20
percent depending on the area.
The high rise of prices has absorbed to a great extent the increase
in objective values, at least regarding the gap between them and
the market prices. Particularly in the lower-priced areas with
bigger scope for a rise, the difference between market prices and
objective values remains massive. The biggest difference is found
in Perama, west of Piraeus, where the highest objective value is
153.3 percent lower than the higher price of sale, as the former
increased by 27.8 percent to 750 euros per square meters while the
market price reached 1,900 euros/sq.m. — 36.3 percent higher
than 12 months earlier.
The picture is similar all across the capital. For instance, in
Petroupolis, west of Athens, the difference between the highest
objective values and market prices is at 108.3 percent, in Zografou
at 93.1 percent, in Haidari at 77.8 percent, in Peristeri at 73.9
percent and in Vrilissia at 76.5 percent. On the contrary, this
difference diminishes in more expensive areas: In Psychico it
stands at just 12.4 percent, in Ekali at 14.3 percent and in
Glyfada it comes to 40.3 percent.
Real estate market professionals believe that the decline in demand
in the current year will help the consolidation of prices in their
levels at the moment as the scope for further significant increases
appears very limited. On the other hand, the possibility of
“auctions” between consumers for the purchase of newly
built houses that are exempt from VAT seems remote due to the
product’s high supply. “The stabilization of prices
expected this year combined with the new rise in objective values
in 2007 that is almost certain will bring objective values very
close to market prices, paving the way for the proper application
of VAT on newly-built houses,” a high-level estate agency
official told the Kathimerini newspaper.
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29 December 2005 - Revaluation of objective
prices aims at boosting tax revenues
The government yesterday made public a new set of figures that
determine the tax payable on property transfers as it aims to use
the country’s booming property market to help improve its
budgetary health. Called objective values, the tax authorities use
these figures to determine a minimum value for every piece of real
estate, on which tax is applied. The new objective values,
presented by the Ministry of Economy and Finance, show an average
increase of 30 percent from existing rates, effective as of January
1. Increases differ depending on the area in which the property is
located. Objective values in Thessaloniki will rise by 31 percent
as of next week, while in some parts of Athens, such as the
beachside suburb of Hellenikon, the increase reaches as high as 70
percent.
The government has promised to raise objective values again, but
gradually over the next three years to avoid provoking a shock to
the market. In an attempt to sweeten the deal, tax-free thresholds
on some property transactions, such as for first-time buyers, will
also rise in the new year. Market experts, however, say that the
new costs far outweigh any benefits from the imminent changes.
Investor speculation ahead of upcoming value hikes shifted trading
activity in the property sector a gear higher in 2005, pulling
prices upward.
Opposition parties have accused the government of doing this on
purpose and giving the economy an artificial boost. “The
government not only takes back the tax cuts, but burdens the market
with the rise in objective values,” said PASOK’s Vasso
Papandreou. The higher values mean that more revenues will flow
into state coffers in a year where Greece must reduce its budget
deficit to below 3 percent of output or otherwise face steep
penalties from the European Union. Revenues from property taxes in
2006 are expected to double from this year. The increase in
objective values is the first since 2001.
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28 December 2005 - New objective values
The Ministry of Economy and Finance will publish today the new
“objective property values” that are expected to be
between 25 and 30 percent higher, on average, than the previous
ones. (Objective values are set for taxation purposes because of
the impossibility of taxing people and corporations on the actual
value of the properties since transactions are not fully recorded.
Objective value always lag actual market value, usually by about 30
percent. In recent years, however, the lag had increased
considerably, leading the government to update the objective values
for the first time since March 2001.)
According to sources, the greatest rise will concern Irodou Attikou
Street, in central Athens, where the objective value for properties
will rise to 10,200 euros per square meter from 4,200 euros per
sq.m. at present, a rise of 130 percent.
In areas close to metro stations, objective values will rise nearly
70 percent, while higher rises (up to 120 percent) will take place
in some southern seaside suburbs.
The ministry will publish detailed price lists for Attica, but will
provide only the highest and lowest values for the rest of the
country. The new values will take effect on January 1, 2006.
Exception is made for farmland or places outside city planning
limits, where the new prices will take effect later in January.
According to a ministry circular, those who have informed tax
authorities by the end of the year that they intend to buy or sell
property and have already been assessed transfer tax can sign
contracts at the old objective values by the end of February.
On top of the rise in objective values comes the imposition of 19
percent VAT on new constructions. The state also wants to increase
other cost factors in construction so as to increase its VAT
revenue by 50 percent. These changes have been widely condemned by
construction firms who fear that the imposition of so many extra
charges will lead to a market downturn. For its part, the
government says it has increased tax breaks.
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1 December 2005 - Is VAT on property a
problem?
The introduction of value-added tax (VAT) on new buildings from
January 1 is a positive measure but the draft bill on property
taxation leaves much to be desired, the president of the Technical
Chamber of Greece (TEE), Yiannis Alavanos, told the parliamentary
committee debating the document yesterday. “Contrary to what
was expected, the bill in general brings no unification or
simplification of taxes. It goes entirely in the opposite
direction, making the system especially complex and beyond the
capacity of the responsible department to process it,” he
said. “Why should this difficult, improperly prepared
application of VAT have been burdened with this labyrinth of new
taxes and arrangements?” he asked. Alavanos said the
government’s handling of the matter has been inappropriate.
“The prospect of homebuyers having to pay eight percentage
points of additional tax in relation to that currently in force is
no longer an issue since the way the introduction of VAT was
announced has already pushed up prices by 20-30 percent in just six
months,” he added. Alavanos predicted that the exemption of
first-time homebuyers from VAT will exacerbate problems, as
construction invoices concerning first homes are not tax deductible
and will be added to costs.
“Therefore, the apartment seller subject to VAT will not find
it in his interest to sell it as a first home and will either ask
for a higher price or refuse to sell it,” he warned. Other
arrangements will have an adverse impact on small construction
companies which will limit competition and drive prices further up,
he added.
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3 November 2005 - Property tax bill
The government will table the eagerly anticipated property tax bill
by the end of the month, Deputy Economy Minister Antonis Bezas
announced yesterday. He reiterated that value-added tax will be
imposed on new buildings as of January 1, 2006, as will the new
so-called “objective” value, determining each
property’s tax in transactions. Originally the government had
promised to publish changes in property taxation by end-September,
now leaving little or no time for transactions.
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3rd November 2005 - The number of Britons who
plan to buy properties abroad is set to double
The number of Britons who plan to buy properties abroad is set to
double, according to research  compiled by Barclays. 5% of people questioned by the
bank already own a home abroad, while a further 5% said they would
"definitely" buy a property overseas in the future. Over half (58%)
of those who are considering a purchase said they were concerned
about local legal or tax issues; 17% were worried about the
security of an empty property; and 8% feared they might be
overcharged by the seller. Among those questioned, Spain was the
most popular location for a second home, with 30% of potential
buyers naming it as their preferred destination. Crete (Greece) was
not specifically mentioned. "The trend towards owning property
abroad shows no sign of abating and could go through the roof if
people were more confident of a hassle-free purchase," said Suzanne
Clay, head of European business development at Barclays. Between
2002-03 and 2003-04 the number of British families who owned a
second property overseas increased by 20% to reach a quarter of a
million.
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14 September 2005 - Greek Merger of property
taxes likely to increase burden for middle-range
owners
According to the National Reform Program announced by
the Greek (Crete) Economy and Finance Minister Giorgos Alogoskoufis
on the 14th September 2005, the Greek government is studying
“the integration of existing taxes on property,” in
combination with the introduction of value-added tax (VAT) on newly
built homes and a capital gains tax. There are now about 30
different taxes on real estate and the single tax that will replace
them will be higher for household properties than those owned by
businesses. The tax will probably be levied on the total market
value of the property, to be calculated on the basis of an
objective criteria. There will only be a limited number of
exemptions. If the government ultimately approves the plan, it
should include a significant reduction in the inheritance tax with
a view to restricting market distortions, according to previous
recommendations of Finance Ministry departments. A number of
internal ministry reports are said to have shown that the
integration of all property taxes would produce a significant
increase in the liability of middle-range owners, many of whom
would be forced to pay tax for the first time. The National Reform
Program also includes a reference to the introduction of tax
measures in support of large low-income families.
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3 August 2005 - Greek Property Taxes under
review
On the 3rd August 2005, the Greek (Crete) Economy and Finance
Minister Giorgos Alogoskoufis unveiled the draft  bill imposing
a 19 percent value-added tax (VAT) on new buildings after 1st
January 2006. The proposal is that the tax is be paid by property
owners to construction firms which, in turn, will pay the VAT to
the state. Transfers of properties acquired after 1st January 2006
will be subject to a graduated capital gains tax, whose rate
depends on the number of years the seller owned the property before
selling. For example the tax rate is 20 percent for owners selling
a property after ownership of up to five years; 15 percent if the
ownership period was from five to 15 years; 5 percent if it was
from 15 to 25 years; and 0 percent if the seller owned the property
for over 25 years. Property buyers, who until now paid up to 11
percent of the property’s value as transfer tax, will
henceforth pay a 1 percent tax called a transaction fee. Although
first-time house buyers will be exempt from the tax it is still
unclear how a 'first-time buyer' is being defined.
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