August 9, 2018 / 10:09 AM / 2 months ago

Recovery in Greek property prices gains traction as economy improves

    * Residential property values rise 0.8 pct yr/yr in Q2
    * Economic recovery starting to be reflected in prices
    * Prices had declined by 42 pct since 2008 peak

    By George Georgiopoulos
    ATHENS, Aug 9 (Reuters) - A nascent recovery in Greece's
residential property market picked up pace in the second quarter
of 2018, central bank data showed on Thursday, raising prospects
the improving economy will buoy prices further.
    Property accounts for a large chunk of household wealth in
Greece, which has one of the highest home ownership rates in
Europe at 80 percent versus a European Union average of 70
percent, according to the European Mortgage Federation.
    Prices of the apartments in which most Greeks live rose 0.8
percent in the quarter from a year earlier, Bank of Greece data
showed, with the recovery accelerating from an upwardly revised
0.1 percent increase in the first three months of the year.
    Prices had slid 1.0 percent in 2017 from a year earlier, 
taking the cumulative fall since 2008, when the country's
protracted recession began, to 42 percent.
    The market has been hit by property taxes imposed to plug
budget deficits, tight bank lending and a jobless rate still
hovering around 20 percent, the highest in the 19-nation euro
zone.
    Apart from undercutting household wealth, the fall in
property prices also affected collateral values on banks'
outstanding real estate loans. Yet values have began to rebound
in the first two quarters of 2018 and economists expect the
price recovery to continue.
    "The data confirm that the property market has entered a
mild recovery phase," said National Bank economist Nikos
Magginas. "The recovery could gain speed if disposable household
incomes and bank lending improve down the line."
    Magginas said the rebound in residential property prices was
more pronounced in tourism-related segments of the market,
driven by strong demand. 
    Greece's economic prospects improved after it signed up to a
third bailout package worth up to 86 billion euros ($107
billion) three years ago.
    Its 180 billion euro economy expanded for a fifth straight
quarter in the period through March this year, and at a faster
pace than in the previous quarter, helped by stronger exports.
            
    The following table summarises central bank data on Greek
apartment prices:
    
                          2013  2014  2015  2016  2017* Q2 2018*
Index                     69.5  64.3  61.1  59.6   59.0  59.5
Change (y/y %)           -10.8  -7.5  -5.1  -2.4   -1.0   0.8
New (up to 5 years)       71.6  66.8  63.0  61.2   60.7  61.3
Change (%)               -10.7  -6.5  -5.6  -3.0   -0.8   0.9
Old (older than 5 years)  68.3  62.8  59.8  58.6   57.9  58.4
Change (%)               -10.8  -8.1  -4.7  -2.0   -1.2   0.7

* provisional data
source: Bank of Greece    

 (Reporting by George Georgiopoulos
Editing by David Holmes)
  
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