in accordance with the rules of the Eurosystem,
substantially higher financing costs.
In regard to the domestic property market, in
2014 there was sustained, albeit reduced, pres-
sure on the commercial values, prices and rents
of both residential and commercial properties.
The obstacles to the market’s recovery are com-
pounded, among others, by high unemployment
rates, the tax burden on real property, financing
limitations, the drop in investment for the con-
struction of new houses and the difficulties ema-
nating from an ever-changing tax regime (capital
gains tax, readjustment of real property objective
values etc.) Moreover, the first signs of stabiliza-
tion that were recorded in the property market
since the last months of 2013, as a result of the
improvement in the economic climate, and in eco-
nomic expectations, seem to have been adverse-
ly affected at the end of 2014 by increased uncer-
tainty due to developments in the political arena.
In the housing market, both prices and transac-
tions continued to decrease in 2014, albeit at a
more moderate pace.
More specifically, the data collected by credit
institutions show that apartment prices fell by an
average rate of 7.5% in 2014, as compared to
10.9% in 2013 and 11.7% in 2012. The drop in
prices is more pronounced in large urban centres,
as compared to other major Greek cities and
other areas; it is also more pronounced in the
case of older and larger properties, in relatively
more expensive areas of the country. The shift of
home buyers towards smaller and cheaper prop-
erties in medium-cost areas, which was evident
since the outset of the crisis, gained momentum
in 2014.
Despite the fact that the stock of unsold homes
remains large, research carried out by real estate
firms during 2014 shows that there is increased
interest for low- and medium-value properties,
which are viewed as alternative forms of invest-
ment. It is estimated that this has been also facil-
itated by the substantial decrease in the property
transfer tax (to 3% in 2014), which, in the near
future, is expected to help boost the very low
resale rates in the domestic market. The decline
of housing prices may possibly be sustained in
the following quarters, albeit at more moderate
rates. Moreover, the report of the Bank of Greece
also states that the gradual stabilization of the
housing market could also be expedited by the
settlement of the bad loans issue.
Trade with Greece
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