Property
prices in Greece are expected to keep falling in the coming years but
this is making homes more affordable, according to the latest
analysis of the Greek real estate market.
Prices continued
to fall in 2013 to reach a peak to current decline of 32.7% in the
third quarter of last year, says the report from Fitch Ratings.
But it points out
that recently, the Greek government implemented new initiatives to
promote residential housing liquidity. The most notable is the
decision to allow REITs beneficial tax treatment to hold residential
properties of up to 25% of their total assets. But the actual impact
of the new tax treatments remains uncertain.
Fitch expects a
further fall in house prices in the coming years towards a total peak
to trough decline of 42%. The Greek parliament extended the
moratorium on foreclosures for another 12 months in December 2013 and
this takes off some pressure on the additional supply to the housing
market.
The report also
points out that affordability for new housing transactions has
improved as house prices have fallen further, supported by the
prolonged low interest rate environment. As a result Fitch expects
stable to improving affordability for the coming years.
‘The improving
prospects for the Greek economy and the resulting increase in
economic affordability may, however, be offset by the possible
interest rate rises and the continued leveraging of Greek banks. The
Greek market is likely to remain dislocated in 2014 with low housing
turnover and weak demand,’ the report explains.
When
it comes to lending interest rates remain much lower compared to the
pre-crisis period following the deep monetary expansion programs
initiated by the European Central Bank following the crisis.
‘Funding costs
have therefore remained quite low for financial institutions and this
has translated into lower mortgage rates for borrowers. Due to
central bank support, Fitch does not expect interest rates to change
much in the near term and believes mortgage rates will remain stable
over 2014,’ it adds.
Also, it adds
that the level of new arrears has begun to shrink as the economy
begins to recover, however the overall volume of non-performing loans
is expected to continue to increase as Fitch expects a slow orderly
wind down of the foreclosure pipeline. Arrears should peak in
2015.
Overall mortgage lending levels are expected to remain
flat. The level of new gross mortgage lending has reached a new low,
driven by both supply and demand. On the supply side, Greek banks
continue to leverage, underwriting standards remain strict, and the
competition among lenders has also remained at lower levels. On the
demand side, mortgage applications remain at low levels as HPI
continues to decline.
‘In line with the house price
forecasts and credit availability for borrowers Fitch expects
relatively flat lending volumes over the coming years. Borrowers
incentives as well as their ability, to refinance is likely to be
impaired due to a combination of lenders’ reduced access to
financing, banks’ plans to leverage and tighten lending criteria,
rising default rates and declining house prices,’ the report
concludes.
hopefully in the new year if prices begin to decline so that people can make better investments in their heritage
ReplyDeleteis good news because the market house have the 2014 stable
ReplyDeleteI hope the market improves each year as now
ReplyDeleteit is good that the Greek market improving day by day, that's good news for Greeks
ReplyDeleteis important the Greek government implement new initiatives to promote residential housing liquidity because have good properties, now is the moment to choose a property,if you wish buy have to check the possibilities to acquire a beautiful property with advisor
ReplyDelete