According to Professor Panas, “the increase in
property prices since 2000, as well as the avail-
ability of mortgage loans, lured many Greeks into
buying a home, but also led to the current
adverse situation. There was no property price
bubble in the real estate market, neither this bub-
ble burst; it is simple as that: the way prices
evolved, in conjunction with the economic crisis in
Greece, spread the crisis to the real estate sector.
Thus, the ‘golden years’ of the Greek property
market are all gone. Property prices did not plum-
met, despite the economic crisis. However, the
crisis in the Greek property market was aggravat-
ed, on one hand, by the exuberance that pre-
vailed mainly from 2004 to 2005, and, on the
other hand, because a factor of major importance
for this market had been neglected: the demo-
graphic problem. The problem, or the crisis, of the
Greek property market is now concentrated on
the stock of unsold homes in Greece. The large
number of unsold homes (200,000-270,000
according to our estimates) was a decisive factor
of the crisis and seems to be preventing us from
exiting it, despite the drop in construction activity.
This dire situation was further aggravated by the
fact that Banks drastically reduced lending, and
as soon as this source of financing dried down the
property market ran out of fuel. It suffices to say
that mortgage loan growth stood at 35% five
years ago, whereas last year it fell below 4%.”
According to real estate broker data, property
sales have plummeted all over Greece by more
than 50% year-on-year, while those who obtained
building permits in recent years have not yet used
them. In the past few months the property market
dipped to the lowest levels of the past few years
in terms of both demand and supply. On the other
hand, prices seem to cling to a large part of the
surge of the previous years, although developers
recently seem to water down their demands,
offering generous discounts in order to dispose of
the unsold apartments and maisonettes devel-
oped during the past three-years. Nonetheless,
experts believe that buying property is a very
good defensive investment; and this is how
investments should be at the present time,
because in case the economy does worse than
anticipated other types of investment will incur
heavier losses.
Moreover, real estate firm executives have
recently been almost exclusively dealing with the
renegotiation of existing (mainly business) leases
instead of the new developments that assisted
the growth of the property market and, in general,
of the Greek economy. All these are painting a
bleak picture in the real estate market, which suf-
fers from an excess supply of newly-built proper-
ties, reduced demand and price decreases that
have exceeded 15% since the beginning of the
year in many Greek regions. According to real
estate agency data, there are more than 120,000
unsold apartments all over Greece, with the
biggest problems occurring in tourist areas that
were developed in a chaotic manner.
Major problems have also emerged with the leas-
es of large homes, usually in areas where high
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