September 11, 2012 / 10:36 AM / 5 years ago

Greek construction slumps, heads for 7th year of contraction

* Greek building volumes down 12 pct in H1
    * Volume has shrunk by 75 pct from 2005 peak

    ATHENS, Sept 11 (Reuters) - Greek construction activity
shrank by an annual 12 percent in the first half, leaving the
industry on course for a seventh consecutive year of contraction
that illustrates the depth of the country's economic slump.
    Building activity in volume terms contracted to 9 million
cubic metres, down from 10.2 million a year earlier, statistics
service ELSTAT said on Tuesday. It had stood at 36 million in
the first half of 2005, the sector's last year of expansion.
    Construction is a key growth driver for Greece's 215 billion
euro ($285.7 billion) economy, and the sector that has been hit
hardest by the austerity policies the government has adopted to
tackle the country's debt crisis.
    Bank lending for mortgages has dried up and property taxes
have soared under the country's EU/IMF bailout, sending
investment in residential property plummeting.
    Overall investment, of which real estate is a large part,
dropped by a fifth in first-half economic output data published
last week.
    Demand for cement fell to its lowest level since the 1960s,
said Greece's biggest cement producer Titan.
    Almost half of the country's construction workers have lost 
their jobs since 2007, according to ELSTAT figures. An unsold
stock of about 250,000 homes is weighing on the sector.   
    Greece is going through its worst recession since World War 
Two. Its economy is expected to shrink for a fifth consecutive 
year in 2012, having contracted by about a fifth since 2007, its
last year of expansion. 
    Its government acknowledged on Monday it was having trouble
persuading its foreign lenders to accept a plan to save nearly
12 billion euros over the next two years, essential to unlocking
the aid payments its needs to avoid bankruptcy. 
    ELSTAT provided the following details:  
                        JUNE 2012    JUNE 2011     Y/Y CHANGE
   Volume (m3 '000)       1,111       1,871          -41%
   Surface (m2 '000)        300         524          -43%
   Building permits       1,962       3,369          -42%
                   JAN-JUNE 2012  JAN-JUNE 2011  Y/Y CHANGE
   Volume (m3 '000)      10,210       9,038         -12%
   Surface (m2 '000)      2,760       2,389         -13%
   Building permits      16,211      13,358         -18%
   source: ELSTAT

 (Reporting by Harry Papachristou; Editing by John Stonestreet)

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