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Greek house prices continued to fall at an accelerated rate during the first two months of 2010. According to Greek members of the UK's Royal Institute of Chartered Surveyors (RICS), the average drop in price has been approximately 10% year-on-year, with variations relating to factors such as location, availability of housing stock and developers' readiness to negotiate.
All indications suggest that the Greek property market will be more downcast in 2010, than it was in 2009, when house prices fell by around 5%. The Greek economic climate has clearly deteriorated, unemployment is rising rapidly and banks continue with stiff loan distribution policies. Such factors have almost frozen the demand for newly built homes, which are the least affordable properties, since developers go to great lengths to keep prices stable. This continuing attitude will increasingly lead to prospective buyers looking for resale homes that are 10-15 years old and in good condition.
Data from the Bank of Greece for 2009 illustrates that newly built homes showed more resistance to falling prices than resale homes. The respective rates were 3.1% and 5.6%.
The annual RICS survey for the European housing market estimated that house prices in Greece fell by 5%, placing the country roughly average for Europe. However, it should be observed that the correction of house prices in most markets began in 2008, which was not the case in Greece, where property values had actually risen.
Generally in Europe, different groups seem to be forming. The first faction includes countries with housing markets that are falling at an escalating pace, such as Germany, Ireland, France, Poland, the Netherlands and the Baltic countries. In contrast, countries such as Spain, Greece and Denmark the fall in house prices continues, but at a slower rate than in 2008. The second fraction where the housing market crash has been short live and the first signs of recovery are already visible regarding both price and sales, includes the UK, Norway, Sweden, while Switzerland and Austria experience no fall in house prices at all.
The RICS report states that the recovery is expected to gather speed in 2010 when low interest rates take effect and economic activity accelerates. Moreover, a collapse in the property markets of Europe will be averted; therefore, this turn down will probably be more limited than the last major one in the 1990s.
