Battered by Taxes, Greek House Sales Fall Off Fast

ATHENS – Greece’s Deep Recession is taking another toll: on house sales. A new emergency property tax in a desperate attempt to raise money has pushed new home purchases down even further, with expectations as few as 50,000 homes could change hands or be bought by the end of the year. Working class Greeks, whose pay has been cut, taxes raised across the board, and facing layoffs and an uncertain future, are making far fewer big purchases and homes are at the top of the don’t-buy list for many.

Data from the Bank of Greece showed that in the second quarter of the year only 11,400 house purchase transactions were conducted, bringing the total to the first half of the year to only 23,800 and expectations of a further decline for the rest of the year, the newspaper Kathimerini reported.
There were 74,000 sales in 2010 while in 2008, before the economic crisis broke out, there were 116,000 sales, which means a precipitous drop-off for this year. Foreign buyers are also becoming wary because of taxes and the country’s notoriously unscrupulous home purchase practices for those who aren’t citizens.
The new property tax, to be put into electric bills under the threat of having power turned off for non-payment, means most property owners will now have to pay twice what they were paying to own property, further driving down demand and adding to the recession. The new tax, which was supposed to be only for this year, has already been extended through 2012 with fears it will become permanent and put a big dent in the housing market. Officials said it will add between 400-1,000 euros per year to the existing tax bills at a time when most Greeks are having big pay cuts and a slew of taxes across-the-board, including another new income tax of 1 percent.
The property tax is estimated to bring in another $2 billion a year, although many Greeks are saying they won’t pay. Tax evasion costs the country nearly 20 times that amount annually and the government has failed to go after the evaders, the Troika of international lenders providing Greece with a $152 billion bailout has charged.
Lefteris Potamianos, the head of the Search & Find estate agents, told Kathimerini that, “In the last few months many house owners who are also burdened by a mortgage loan proceed to the sale of their property in order to obtain some cash and avoid paying extra tax. What began with plots of land and holiday houses, that are very hard to sell right now, is now affecting the main house market.” The paper said that the trend is set to grow in the next few months, given the new levy, and even more from the new year as the so-called objective prices (the property estimates used for tax purposes) are going to grow from 2012, entailing a greater tax burden for owners.