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01/07/2008

Are property prices falling in Crete?

 

This burning question is equally important for anyone involved in the Real Estate market in Crete, either as a seller or as a buyer. The specific article does not answer just with a Yes or No. It attempts to provide a picture with arguments and statistics indicating what is happening now and what may happen in the future.  

It is common knowledge that all real estate professionals, no matter if they are construction companies or realtors have tried to believe that everything is all right and that things will go well, which is understandable and expected. However at the same time we owe to face the truth and provide sincere information to all interested individuals - buyers or sellers.

In order to create a base of arguments we will examine a number of articles and statistics published in 2008. Exactly because most people outside Greece do not read Greek newspapers we will refer exclusively to Greek publications so that we can provide a picture from within the market.

In the Greek newspaper Proto Thema on the 24th of February 2008, in an article of Mr. Kostis Plantzos a reference is made to data from the Bank of Greece stating that the property prices increased by 10% to 15% during the past 10 years. These are the percentages that made all sellers and buyers equally happy exactly because whoever sold knew that the profits will go up and whoever bought knew that it was a sound investment exactly because of these percentages.

In an article in Kathimerini during the month of March it was said that the average construction cost compared with March of 2007 had risen by 5,6%. This was due to the increase of oil prices. One can say that constructors have the choice of either reducing their profit margin or limit the increase of prices of all properties under construction or off plan.

In the local newspaper of Chania, Neos Kirikas in the weekly publication "Idioktisia" (which means Property) on the 10th of June 2008, mentions that there is a deduction in demand but prices are holding on. All constructors in Greece that do not suffer from excessive loans are displaying patience and are renting some of the key ready properties that have not been sold. Professor Hardouvelis of the Piraeus University was quoted to say "Especially regarding residences, it is likely that a deduction of prices no more than 5% may occur, while commercial properties are expected to rise in demand - and as a result slightly rise in price".

In the same publication in Neos Kirikas on the 24th of June 2008, the main title was "A deduction of property prices up to 15% is expected". In this article another professor, Mr. Malliaropoulos was quoted saying, that inflation pressure in conjunction with the great offer of properties in Greece and the expected interests increase will lead in a correction of property prices between 10 and 15%.  This correction will happen in stages. In the same article there is a reference that at the moment, the main form of discount offered to buyers is in kind, in the form of "presents". As for example, free air condition units, bathroom furniture, pergolas, etc.

As much as we want to believe that Crete differs from the rest of Greece, especially because of the intense interest from international buyers the past decade, the truth is that it can not escape the general climate. The first half of 2008 has proved that the interest of international buyers has decreased when compared with 2007 and so have the sales. It is enough to look at some of the statistics published in the local newspaper of Chania showing a deduction of arrivals up to 35% compared with last year. We must all remember that buying a property abroad is usually a luxury and not a necessity for most people, no matter where they are from. As a result it is only logical that interested buyers are holding back at the moment due to the situation in the world economy.

So what is the meaning of all this for sellers of properties in Crete? It means that great care must be given to pricing because exaggerations may delete the limited interest of some buyers. Also, individuals must restrain themselves when pricing their property for sale and Realtors are obliged to offer advice and guidance for this matter.

What does it mean for the buyers of properties in Crete? One may say that the situation is in the advantage of the buyers. This is the right time to buy - especially key ready properties constructed recently or plots of land. If new constructions get even more expensive then these already built properties are better value. However buyers must keep in mind that any type of crisis may create an opportunity, but greed can demolish it. Additionally, opportunities do not stay around for long. So for example if buying off plan gets too expensive then the demand of Re sales or New builds will rise. If that happens then all analysts agree that the prices of these properties will rise.

So at the end of the day things are not bad and professional Realtors and Property Consultants exist in order to maintain the balance so that both, sellers and buyers, feel that they have gained from every sale concluded, and everything can turn out quite all right.

For even more information on this subject seek the article:    

"Real Estate in Chania, Crete: Now is the right time to buy"

Andreas Batakis has lived in Greece, Ireland and Cyprus, acquiring a Business Administration Degree in Greece, an International Marketing Diploma and a Bachelor of Science in Human Resource Management in Ireland. He is also a member of the UK based Chartered Institute of Personnel and Development. Andreas has extensive experience in helping people from all over the world to locate a home in Crete and is a founding member of the independent consultancy Talos Properties.

Talos properties was created in order to guide and protect all of you who wish to acquire a property in Crete via offering you a wide range of choices as well as professional advice in property related matters. For more information please access the Talos Properties website at: http://www.talosproperties.com

tel: 0030 6977815496

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