Gradual property auctions to prevent price crash
Greece's banks will gradually auction homes to recover bad debts in a bid to avoid putting sharp downward pressure on property prices, said the deputy governor of the Bank of Greece, the country's central bank, on Wednesday.
Concerns are rising in Greece that forced property auctions conducted by banks racing to meet bad loan reduction targets set by banking regulators will send prices crashing down after the sector was severely hit by the country's debt crisis. Despite interest being strong for pockets of the market, such as luxury real estate on the Greek islands, the broader market remains depressed due to tight credit conditions and high unemployment levels.
Speaking at a conference, deputy governor Theodoros Mitrakos said lenders have mapped out the how they will they sell their properties, putting larger sized properties under the hammer first.
"Banks will hold on to important properties in the event that very low bids arise in the auction," said Mitrakos.
Mitrakos said the auctions will help create improved conditions of supply and demand, while also helping generate interest in the market in the medium term.
"I believe that the market will separate into good professional assets of investment interest that keep their value, or increase it, and older properties in rundown areas where no buying interest emerges and their vales will drop," he said.