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House price growth slowing
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House price growth slowing

House prices are still rising in Greece, but there's been an obvious slowdown. Prices barely rose during the first quarter of 2007, and the y-o-y increase in prices to Q1 was 7%. All indications are that the trend is down.

These figures are for "other urban areas" – bizarely, no official house price statistics are now reported by the Bank of Greece for Athens. In fact, Athens house prices appear to be slowing earlier than the rest of Greece.

Average annual GDP growth from 1995 to 2005 was 3,8%, among the highest in the EU and OECD. The economy grew by 4,2% in 2006 and is expected to expand by 3,9% in 2007. From 1994 to 2005, real wages were rising by an average of 7,5% annually. Real wage growth in 2006 was 5,8%

With Greece's accession to EU membership, a remarkable drop in interest rates was observed, around 8 percentage points between 1995 and 2002. In May 2007, mortgage rates on new loans ranged from 4% to 4,56% while rates for outstanding loans ranged from 4,70% to 5,56%. Financial liberalization has led to lower interest margins on mortgages and higher loan-to-value ratios.

The rise in house values has produced a substantial wealth effect for homeowners, as housing is the single biggest component of household wealth, comprising 80% to 90% of total household wealth, according to the National Bank of Greece. Homeownership rate is high at 80% of all households.

Cradle of Civilization
There is also remarkable demand for real estate in Greece's southernmost and biggest island, Crete. Known as the Cradle of European Civilization, Crete is a popular tourist destination. Britons and Northern European love the long, hot summers and wonderful beaches. Also popular among tourist are the Ruins of the ancient Minoan civilization.

Prices in Crete are still low compared to more popular sites in Southern Europe such as Spain, France and Italy. Holiday homes and villas are sold at around 900 Euro to 1.500 Euro per mē. This is much lower than the prices of coastal Spanish properties, at 2.500 Euro to 3.000 Euor per mē, according to Global Property Guide figures. 

Even properties in Athens, the capital of ancient and modern Greece, are relatively low. City-centre condominiums are priced at around 1.400 Euro to 1.850 Euro per mē.

Source: Global Property Guide

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