May 25, 2017 / 12:45 PM / 2 months ago

Greek property prices slide again as bailout jitters weigh

4 Min Read

    * Residential property values fall 1.8 pct y/y in Q1
    * Prices have declined 41.8 pct since 2008 peak
    * Stabilisation expected once economic recovery sets in

    By George Georgiopoulos
    ATHENS, May 25 (Reuters) - A downturn in Greece's property
market deepened in the first quarter, as uncertainty over its
bailout programme and chronic weakness in its banking sector
further eroded a traditional pillar of the country's ailing
economy.
    Property accounts for a large chunk of household wealth in
Greece, which has one of the highest home ownership rates in
Europe -- 80 percent versus a European Union average of 70
percent, according to the European Mortgage Federation.
    Apartment prices fell by 1.8 percent in the first three
months of 2017 from a year earlier, Bank of Greece data showed
on Thursday, accelerating from a 1.0 percent drop in the final
quarter of last year.
    That took the cumulative fall since 2008, when the country's
protracted recession began, to 41.8 percent.
    The market has been hit by property taxes imposed to plug
budget deficits, a tight credit market and a jobless rate
hovering around 23 percent - the highest in the 19-nation euro
zone.
    Apart from their negative effect on household wealth,
falling property prices also affect collateral values on banks'
outstanding real estate loans.
    The slide has gradually eased from 10.8 percent in 2013 to
2.4 percent last year, and economists expect prices to level out
soon.
    "Uncertainty related to the completion of a bailout review
that prevailed in the first quarter and continued deleveraging
by banks weighed on the property market," National Bank
economist Nikos Magginas said.
    A near-term stabilisation of prices remained the baseline
scenario, expected to be confirmed once economic activity picks
up in the coming quarters, he added.
    Greece was pushed to the brink of default by a debt crisis
that at one stage jeopardised its membership of the euro zone.
Its economic prospects have improved since it signed up to a new
bailout package worth up to 86 billion euros ($97 billion) two
years ago.
    Gross domestic product is still contracting, however, edging
down 0.1 percent between January and March as jitters over the
conclusion of a review of the bailout hurt business
confidence.               
    The European Commission projects Greece's economy will
rebound by 2.1 percent this year.

*************************************************************
                     GREEK APARTMENT PRICE INDICES
                          2013  2014  2015  2016* Q1 2017*
Index                     69.5  64.3  61.1  59.6    59.1
Change (y/y %)           -10.8  -7.5  -5.1  -2.4    -1.8
New (up to 5 years)       71.6  66.8  63.0  61.1    60.5
Change (%)               -10.7  -6.5  -5.6  -3.0    -2.0
Old (older than 5 years)  68.3  62.8  59.8  58.7    58.2
Change (%)               -10.8  -8.1  -4.7  -2.0    -1.7
--------------------------------------------------------------
* provisional data
source: Bank of Greece

 (Reporting by George Georgiopoulos; editing by John
Stonestreet)
  

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