In the realm of the real economy, the bet will be played for cheaper properties, through purchase or long-term rental. “Everything will depend on the evolution of supply and demand, after taking the new measures announced by the government’s economic staff” notes a banking source.
As he explains, “Given that substantial changes in the number of households looking for housing and their disposable income are not going to be seen anytime soon, the battle will be decided on the supply front. Can the stock of properties offered increase? This is the question we are asked to answer in order to formulate a safe estimate for the course of prices and rents in the coming years.”
The truth is that currently the asking rents in the major urban centers and especially in the wider Lekanopedi region are at the highest levels of all time.
How will government measures affect the real estate market?
The initiatives announced at TIF aim to de-escalate them by increasing supply.
These are the following:
1.
Exemption from rental income tax: Owners who have proven that their property has been closed for the last three years or that they rent it for a short period of time will be exempt from income tax if they proceed to rent it out with a three-year contract as their main residence.
According to a systemic group economist, the effectiveness of the measure will ultimately depend on the number of properties that will return to the market. As he points out, there are no official statistics, but it is estimated that around 150,000 houses are currently operating as tourist accommodation through the well-known platforms, while around 500,000 are empty.
“It is a big reservoir. However, for rental prices to fall, a reasonable number of properties will need to return to long-term rental. It remains to be seen whether this particular incentive will be enough for a change of attitude on the part of the owners.”
2.
Short-term rental restrictions and charges: The government has announced that from the coming New Year, the granting of new short-term rental permits will stop in the three largest apartments of the Municipality of Athens. “I don’t see how this will work in favor of housing supply,” the analyst emphasizes. As he says, “in no case does the measure increase it. It will simply stabilize it at the already low levels from 2025.”
In addition, he estimates that “the increase in the daily fee in short-term rentals is not sufficient to limit the income earned by owners to levels lower than long-term ones. With today’s data, only the decline in turnover from this activity could change the data in favor of long-term leases.
3.
Renovate / Rent program: The action becomes more attractive with the increase in the percentage of the subsidy from 40% to 60%, while its maximum amount is doubled from 4,000 to 8,000 euros. It is aimed at owners of empty houses up to 100 sq.m., which will be upgraded and then leased on three-year contracts to private individuals.
The goal is to return to the market about 12,000 houses that are currently empty. The measure will be able to be combined with the income tax exemption mentioned above. Real estate market sources positively evaluate this initiative, noting that if the program runs quickly, it will increase the stock of offered properties.
4.
Upgrading my Home: At least 16,000 homes will be able to be financed through the new action of interest-free loans of up to 25,000 euros for their upgrading. It remains to be seen how much of the program’s funds will go toward foreclosed homes, which will then be made available for long-term rental.
BANKS
How will property prices fall – Three suggestions
The current situation is not only favorable for those looking for a home to buy. In Athens, average prices have already exceeded the highs of the 2000s, while a record was set this year for newly built apartments throughout the country. “It is obvious that the demand is greater than the supply. Therefore, in order to stabilize prices in the first phase, a new equilibrium point should be found,” comments a banking source.
As he points out, “the only substantial measure to date is related to the increase of the real estate investment limit for obtaining the Golden Visa (800,000 euros in Athens, Thessaloniki, Mykonos, Santorini and islands with a population of more than 3,100 inhabitants, 400,000 euros in the rest of Greece ). Also, the property should be at least 120 sq.m. In this way, the demand from foreigners for houses aimed at households will be limited.”
At the same time, however, analysts note, the activation of the second cycle of the “My Home” program will work in the opposite direction. Specifically, it will boost demand for homes up to 150 sq.m., worth up to 250,000 euros and aged 17 years or older. In addition, they do not rule out creating distortions if the number of properties offered with these characteristics turns out to be small compared to the 20,000 beneficiaries of the program.
According to banking sources, “the only way to increase the number of affordable homes is to increase supply.” During the same cycles this can be achieved by the following:
- A. Acceleration of construction activity: Today, there are not a few cases where projects are on ice, due to the uncertainty about the building conditions and the use of the various forms of bonuses provided for by the building regulation. This results from the reduction of new building permits. The Council of State is expected to rule on the matter in the next period, clarifying the terms of the game.
- B. Faster auctions: At the moment, around 300,000 homes are acting as collateral for bad loans. Of these, 20% are expected to be auctioned in the coming years. In other words, it is about 60,000 houses that could be added to the offer. Also, about 12,000 houses have been acquired by the creditors themselves. However, their return to the market is delayed due to problematic legislation that slows down the procedures for their legal and technical settlement. In this context, intervention is requested to speed them up.
- C. Disclaimers of Inheritance: During the financial crisis, 450,000 disclaimers of inheritance were recorded, due to the debts of the deceased. It is estimated that in this way tens of thousands of properties came into the possession of the State, which remain unused, although they could strengthen the offer.
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