Greek apartment prices fall 4.5 pct y/y in Q2- cenbank

ATHENS Wed Aug 24, 2011 4:18am EDT

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ATHENS Aug 24 (Reuters) - Greek residential apartment prices fell 4.5 percent year-on-year in the second quarter of 2011, driven lower by an economy deep in recession, the central bank said on Wednesday.

Downward price pressures continued after a 5.2 percent drop in the real estate price index in the first three months of the year. For the whole of 2010, apartment prices fell 4.7 percent following a 3.7 drop in 2009.

Although property accounts for a quarter of total investment in Greece and 82 percent of household wealth, there had been no widely accepted benchmark for systematically monitoring real estate prices until the Bank of Greece (BOGr.AT) launched its index in 2009.

The latest data showed older apartments, defined as those more than five years old, suffered more pronounced price pressures. Prices dropped 5.5 percent in the second quarter after a 5.0 percent fall in 2010. Prices of newly built flats fell 3.0 percent, the bank said.

The price drop was steeper in Athens, down 6.7 percent, compared to Thessaloniki, the country's second-largest city, where the fall was 4.7 percent in the second quarter.

Hit by a severe debt crisis, Greece's economy has been in recession since 2009, with economic activity seen contracting by more than 4.5 percent this year, more than earlier government forecasts.

The Bank of Greece said residential property transactions declined 39.1 percent year-on-year in the second quarter to 11.386.

Greece has one of the highest home ownership rates in western Europe -- 80.1 percent versus 70.4 percent in the European Union as a whole -- according to European Mortgage Federation data.

A steady uptrend in Greek residential property prices, fuelled by cheap credit after the country joined the euro zone in 2001, slowed to 1.7 percent in 2008 from 4.6 percent in 2007, 12.6 percent in 2006 and 10.9 percent in 2005.

Based on EU Commission statistics, construction accounted for 10.7 percent of gross domestic product (GDP) in Greece in 2008 and for about 8.7 percent of total employment.

The Bank of Greece provided the following data: **************************************************************

GREEK APARTMENT PRICE INDICES

2008 2009 2010 Q2 2011 Index 101.7 97.9 93.3 89.9 Change (%) 1.7 -3.7 -4.7 -4.5 New (up to 5 years) 102.3 100.2 96.0 93.3 Change (%) 2.3 -2.0 -4.2 -3.0 Old (older than 5 years) 101.3 96.5 91.7 87.8 Change (%) 1.3 -4.8 -5.0 -5.5

source: Bank of Greece (Reporting by George Georgiopoulos; editing by Patrick Graham)

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