Slump worsens in ailing Greek property market

Prices of residential apartments in Greece slumped by almost a tenth in the first quarter of 2012 and the volume of property transactions halved, the central bank said, illustrating the depth of an economic recession now in its fifth year.
Higher property taxes to help plug the country's budget gap coupled with tight credit conditions and rising unemployment have put pressure on the real estate market as the country struggles to emerge from its debt crisis.
Signs that the pressure is growing were reflected in Thursday's Bank of Greece data, which showed the annual pace of price falls accelerated to 9.3% in the three months to March from a quarterly average of 5.3% last year.
The volume of residential property transactions and appraisals based on square metres fell 52.1% year-on-year after a decline of 40.7% in 2011.
Property accounts for a quarter of total investment in Greece and 82% of household wealth.
The country has one of the highest home ownership rates in western Europe – 80.1% versus 70.4% in the European Union as a whole – according to European Mortgage Federation data.
A steady uptrend in residential property prices, fuelled by cheap credit after the country joined the euro zone in 2001, slowed to gains of 1.7% by 2008.
Based on EU Commission statistics, construction accounted for 10.7% of GDP in Greece in 2008 and for about 8.7% of total employment.
Greece's economy has been in recession since the last quarter of 2008, with economic activity seen contracting 5% this year and not returning to growth before 2014.