Greek real estate prices show signs of stabilization

Τhe Greek real estate market is slowly, but gradually, stabilizing, with a decline in house prices expected to slow to -2.3 pct in 2016, from -5.1 pct in 2015, -7.5 pct in 2014 and -10.9 pct in 2013, Alpha Bank said in its weekly economic bulletin.

The Bank of Greece, recently said that apartment prices fell 1.5 pct in the third quarter of 2016, on an annual basis, after a 2.6 pct decline recorded in the second quarter and a 6.9 pct fall in the third quarter of 2015. Apartment prices fell 2.8 pct in the January-September period this year, after a 4.6 pct decline in the same period in 2015.

More specifically, in the third quarter of 2016, the year-on-year rate of decline in prices was 2.2 pct for “new” apartments (up to 5 years old) and 1.0 pct for “old” apartments (over 5 years old). According to revised data, in 2015 as a whole the average annual rate of decline in the prices of “new” and “old” apartments was 5.6 pct and 4.7 pct respectively.

According to data broken down by geographical area, in the third quarter of 2016 apartment prices are estimated to have declined year-on-year by 0.9 pct in Athens, 1.4 pct in Thessaloniki, 1.2 pct in other cities and 3.0 pct in other areas of Greece. According to revised data, for the whole of 2015, apartment prices dropped on average by 5.3 pct, 5.4 pct, 4.9 pct and 4.6 pct respectively in the above-mentioned areas. Finally, as regards all urban areas of the country, in the third quarter of 2016 apartment prices declined by 1.5 pct year-on-year, while based on revised data, for 2015 as a whole, they declined at an average annual rate of 5.1 pct.

Alpha Bank analysts said that in the period from 2004 until the end of 2010, house prices grew at a faster rate compared with rental prices, although the rate of increase began falling from 2007. From 2011 onwards, the house/rental price ratio fell below the long-term trend, as a result of a decline in apartment prices.