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Greece: Favorable conditions for real estate investment

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Greece: Favorable conditions for real estate investment

The message that the Greek banking system has the will and the liquidity to finance the housing needs of an average household, at a crucial moment for the real estate market whose prospects are favorable, gave Piraeus Bank executives in a presentation of its prospects real estate market. They pointed out that now is the time for an average household to invest in the real estate market, presenting in detail the comparative benefits for a household to choose to buy a home from choosing the rental solution.

Elias Lekkos, chief economist of Piraeus Bank, said that in 2021, with the condition of the final control of the pandemic and the full liberalization of the activities and mobility of the citizens, it is expected to signal the restart of the market.

Based on the data-estimates collected by credit institutions, the nominal prices of apartments in the second quarter of 2021 were increased by 4.6% (provisional data of the Bank of Greece) compared to the corresponding quarter of 2020. He also noted that There is already an increase in demand and consequently an increase in prices throughout the territory. The maintenance of low interest rates by the ECB, the high liquidity of Greek banks and their intention for strong credit expansion, favor lending.

Very low to zero interest rates on deposits in turn contribute to the demand for alternative placements, with the dominant, traditionally, real estate market. An investment property offers net returns through rents of 3% to 4% on average, without taking into account the expected rise in value, he added.

The recent revaluations of fair values give a significant impetus to real estate transfers, especially in areas where large increases are recorded. It is estimated that many taxpayers will rush to the conclusion of real estate purchase contracts by the end of the year, in order to avoid additional charges of 3% tax on fair value. Many owners are expected to take advantage and proceed with the purchase and sale of real estate, mainly in areas where increases were recorded such as: 95% in the center of Athens, up to 76% in Chalandri, 75% in Dafni, 62% in Anavyssos, 60% in Agios Dimitrios , 57% in Elliniko, 53% in Glyfada and 41% in Zografou.

According to market information, the average residential area sought for purchase is 95 sq.m. and the average of the maximum price set by prospective buyers-users in their search for a real estate purchase shows an increase for 2021 and amounts to 160,000 euros compared to the corresponding average for 2020, which ranged at 147,000 euros.

Mortgage or rent?

Paying rent every month, although it offers housing, does not return anything in terms of investment. In the case of buying a home, either with own resources or by taking out a mortgage, the property is a property that provides imputed income if owned. There is also the possibility of profit in case of future resale, as, although property prices have risen significantly in recent years, they come from a sharp drop in the first years of the crisis. Combined with lower mortgage rates and more expensive rents (due, for example, to short-term rentals), buying a home can be significantly more rewarding than renting.

As it was pointed out, the purchase of real estate with bank lending presupposes an equal participation of at least 20% of the market value. In case of increase of the own participation, the interest rate is lower.

The following example was given:

-Let's assume that a house with a commercial value of 100,000 euros is rented for 450 euros per month or 5,400 euros per year

-In the case of its purchase for home ownership at current value, the picture is as follows:

-100,000 euros the value

– 6,000 euros the various expenses (real estate, notary, lawyer, transfer tax, mortgage rights, etc.)

-Total cost 106,000 euros.

In addition, there is an annual charge due to ENFIA and maintenance costs, amounting to 400 euros.

-In the case of receiving a mortgage loan, amounting to 80,000 euros, with an interest rate of 3% and lasting 30 years, the monthly installment is set at 340 euros (-24% of the rent) or 4,080 euros per year. The amount of relief that results if one deducts the loan installment from the rent and the distribution of the annual ENFIA is 77 euros per month or about 1,000 euros per year (924 euros).

Source: politis.com.cy

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