Although Greece was hit hard by the global housing market crash of 2008, it has been recovering slowly over the past few years and looks to grow considerably in 2017. If you’re looking to invest in a foreign property at a low price, Greece may be an opportune place to start looking.
Compared to the sharp drops the Greek market endured in 2012 and 2013, housing prices, although still falling, are now relatively stable. In urban areas housing prices dropped 5.47% in 2015, the lowest annual fall since 2009, based on studies by Bank of Greece. In the countries largest city, Greece, average apartment prices fell by 4.9% in 2015. While this is hardly ideal it is an improvement from the 6.8% drop in 2014 and the 11.45% drop the previous year.
Overall residential properties prices in the country are down by 42% from their peak in 2008.
While these prospects may not be reassuring there are some signs of hope. Market experts predict that house pricing falls will continue to ease over the next couple of years before fully recovering in late 2018.
In the mean time, the Greek government has begun offering residence to non-EU investors renting or purchasing property valued over €250,000 in order to attract foreign investors and revive the housing market. The real estate transfer tax has also been reduced from 10% to 3% and the introduction of a capital gains tax has been pushed back.
While Greece, along with Italy, Spain and Ireland stands the chance of defaulting: the situation in Greece is not seen as too serious by some economists as Greece only holds a tiny share of the global market.
Investors outside of the EU, particularly from Russia have seen investment in the Greek luxury real estate market as a prime opportunity, assuming that the country will be able to get out of its current economic troubles. While higher property taxes, increased credit restrictions and falling housing prices make for an uncertain outlook, there are still some signs of promise drawing foreign investors to the countries luxury markets in particular.
Mortgage rates in Greece began declining in 2011 and now at an all time low. Rates for new loans stood at 2.55% in Q1 2016 down from 4.67% in the same quarter of 2008. Gross rental yields in urban areas are also currently low, with yields in Athens ranging from 3.37% to 4.09%.
While, buying property in urban areas may not seem like the smartest bet at the moment there may be hope for those looking to rehabilitate housing in rural areas. A 2001 report found that around 34% of housing stock in rural areas is vacant, making these markets potentially lucrative for those looking to invest in long-term rental projects.
Despite massive declines in building permits there appears to be an “excess” of housing supply according to the European Mortgage Federation. According to the EMF this excess can be attributed to a “surge in unemployment, a fall in households disposable income, real estate tax hikes and an unstable- at least until recently – tax regime.” This combines with tightened credit standards and decreased liquidity has lead to a sizable drop in demand.
However, as the Russians apparently know, the early bird often gets the worm.
