Price drops for older homes ahead as property market hit by pandemic

Prices in apartments more than 20 years old are expected to come under pressure in Greece as the real estate market’s resilience to the pandemic shows signs of weakening.

For the most part, property sellers have adopted a wait-and-see stance, as the sector evolves into a two-tier market, with the prices of newly built properties performing better than older apartments, where supply levels are much higher.

Pressure on the prices of older apartments is also coming from the lack of demand for short term rentals as the market adapts to changing economic conditions brought on by the coronavirus and far fewer tourists visiting the country.

In some cases, reductions in selling prices on apartments have reached recently up to 25% - 30% in areas, such as Glyfada and Neos Kosmos, though market sources say that this is indicative of owner needs for cash rather than reflecting a market trend.

The biggest prices reductions are expected to be seen on homes some 30 - 40 years old that are in need of renovations, market officials add.

According to recent data from the Bank of Greece, apartment prices continued to rise in the second quarter, on an annual basis, by 4.1%, compared to an increase of 6.6% in the first quarter of the year.

The figures show that prices are continuing to rise despite the pandemic and the lockdown the country entered in March, but this is the smallest increase since the fourth quarter in 2018. Also, on a quarterly basis, price growth already seems to have flattened out.

Selling prices in the second quarter, in relation to the previous quarter, were minimal to none across Greece, according to a price index put together by classifieds site Spitogatos.

The gap between the prices of new and the old apartments has already begun to open, in a trend that emerged as of October. In the second quarter the annual price increase for the "new" apartments, ie up to 5 years old, was 5.4%, and 3.2% for "old" apartments,, ie older of 5 years, the Bank of Greece says.

Themistoklis - Andreas Bakas, president of the Pan-Hellenic Network of Real Estate Agents E-Real Estates, says that builders are not under much pressure to drop prices and this is because in many cases the plot the apartment building has been built on was purchased between 2012-2015, meaning that it was purchased when prices were considerably lower.

Also, other builders have entered profitable agreements with landlords and have already sold a sufficient number of apartments (within 2019 and early 2020), gaining the necessary liquidity needed to avoid price drops right now, adds Mr. Bakas.

Market data show that the largest number of newly built properties (70-110sqm) constructed after 2018, in relation to the total of newly built properties in Attica, is recorded in central and southern suburbs (Nea Smyrni, Glyfada, Voula, Ilioupoli, Alimo, Palaio Faliro etc.), where newly built properties amount to 22% of total properties up for sale.

Next are the northern and eastern suburbs, where newly built apartments of a similar age and size constitute 13.7% of the total properties for sale in these areas, regardless of the year of construction.

This article was originally published on on Oct 1.