Greece works on key real estate reforms with eye on post-Covid pick up
Greece is working on two key reforms to the country’s real estate sector: a fresh cut in the Enfia property tax and the shifting of property transfers online.
With transactions in real estate frozen due to the pandemic, the government is taking steps to kick start the industry where residential prices have shown resilience to the downturn, so far.
As the vaccinations rollout program in Greece picks up and the economy inches closer to recovery, reforms are helping fuel a sense of confidence in the market, says Stelios Bouras, founder of real estate communications experts, GreekGuru.net.
"In recent weeks there has been an increase in major property players looking to improve their platforms and broader communications efforts," says Bouras.
"We are in talks with several players in Athens and London who have a growing interest in Greece and southern Europe as forecasts improve, but this, of course, depends on how the pandemic unfolds," he adds.
Work on reducing the Enfia levy is well underway as the Finance Ministry has made progress in broadening the number of those who will be subject to the tax, reducing the amount to be paid by the total number of property owners.
In recent months, Greece has created land tax values for an additional 3,000 areas in the country. These land tax values are what form the basis of the Enfia levy.
As a result, total Enfia tax revenues will increase by some 300-400 million euros, according to property experts, creating fiscal space for across-the-board cuts.
In its latest review on Greece, the European Commission said yesterday that progress has been made on Enfia valuations with the completion of the first round of nationwide property valuations.
“The setting of the new property tax zonal values expected by March will substantially enlarge the property tax base. The authorities then plan to complete the design of a revenue-neutral reform to the Enfia single property tax by end-April,” the report added.
It is still not clear how the additional revenues will be poured back into the market. This could be in the form of a broader reduction or cuts for large property owners, who argue that they have been hit unfairly burdened by the tax.
The move comes after the conservative government reduced the property tax by around 20 percent, depending on the total number of assets owned, last year.
Talk of lowering the cost of owning property assets is helping provide some support to housing prices, which had powered ahead just before the pandemic on the back of improving economic conditions in Greece and increased investment from foreign buyers.
Foreign demand mainly targetted villas on islands, such as Mykonos and Crete, while holiday homes along the Athens coastal stretch, known as the Athens riviera, were also very popular among those seeking Greece's Golden Visa.
Despite Greece's steep recession last year (economic output contracted by 10 percent) the market seems to be holding its ground with prices still rising (albeit at a slower pace).
The latest data shows that apartment prices in the third quarter of 2020 increased by 3.2 percent, versus 4.1 percent in the second quarter, and 6.5 percent in the first three months of the year.
Another key change that is in the pipeline and seen providing a considerable boost to the economy is the shifting of the property transfers online.
In a process that is currently very bureaucratic and severely harming the sector’s competitiveness globally, Greek authorities are aiming to have this online procedure operating on a test basis as of March and fully operational in the second half of the year.