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Athens house prices in 29th place among 38 countries October 8, 2007

Posted by grhomeboy in Living.
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Prices for residential properties in Greece are especially high, as many buyers find, and despite objections by contractors and developers, the general opinion held by the public cannot be doubted.

However, according to a recent survey by Global Property Guide (GPG), the average sale price in Athens is currently 2,244 euros per sq.m., which ranks Greece in 29th position among another 38 European nations.

By way of comparison, Monaco is the most expensive location to buy an apartment in Europe at 24,900 per sq.m., followed by London at 18,108 per sq.m. and Moscow at 11,500 per sq.m. At the other end of the ladder lies Moldova’s capital, Chisinau, at 902 per sq.m., the city of Skopje at 1,113 per sq.m. and Slovakia’s Bratislava at 1,292 per sq.m. [all prices quoted are in euros].

Considering such data, one could argue that apartments in Greece are cheap, compared to the rest of Europe. But this, factually, is an analysis that’s very far from reality.

The price of goods and apartments is certainly related to the buyer’s income. In GPG’s survey of annual per capita income, quoting data from the International Monetary Fund, Greece lies in 17th place among a total of 38 European countries.

The average income in Greece is estimated at US$21,925 and the average price of apartments at 2,244 per sq.m., compared to Luxembourg’s US$85,444 and 3,934 per sq.m., respectively. It is therefore quite clear that the price of apartments in Greece is not just dear but extremely expensive.

At the same time, however, when we compare nations with a similar per capita income, the Greek residential property market seems relatively cheap. In Spain, for instance, where the property market shares many characteristics with Greece, annual income is estimated at US$29,266, while the average apartment price per sq.m. in Madrid is 5,160, placing the Spanish capital in 10th position of the most expensive European capitals.

“Apartments in Greece are expensive”, says Nikos Hatzitsolis, of Axies valuation firm. “Prices could be much cheaper in relation to their current levels on account of the major drop in interest rates,” he added. A reason that makes home prices high in Greece is the large profit margin set by contractors. “The market is segmented and fully controlled by contractors,” said Hatzitsolis.

The recent drop in demand and higher supply logically should have led to a reduction in prices, even at the expense of contractors’ profits. However, according to Hatzitsolis, given that contractors are not burdened by heavy debts or borrowing, they are in a position to keep prices “locked” at high levels.

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