Greek home price slide gains pace amid recession
Apartment costs drop 5.6 per cent in second quarter after decline of 4.1 per cent in the first
Greek residential property prices declined at a faster pace in the second quarter than the first, data showed last week, as Greece's slide back into recession hit household incomes and employment.
Property accounts for a large chunk of household wealth in Greece, which has one of the highest home ownership rates in Europe - 80 per cent against a European Union average of 70 per cent, according to the European Mortgage Federation.
Bank of Greece data showed that apartment prices fell 5.6 per cent in the second quarter from a year earlier.
The annual pace of decline accelerated from 4.1 per cent in the first three months of the year. The pace of price declines had begun to ease after a 10.8 per cent drop in 2013 up until the first quarter of this year.
Residential property prices have dropped 40.5 per cent from a peak hit in 2008, when the country's recession began.
The real estate market has been hit by property taxes which the government imposed to plug budget deficits, a tight credit market and a jobless rate hovering near 27 per cent.
Apart from their negative wealth effect, falling property prices also affect the collateral value on banks' outstanding real estate loans.
Greece's economy shrank by 0.2 per cent in the first three months of the year compared with the last quarter of last year, after emerging from a six-year recession last year.
The European Commission projects Greece will fall back into recession in 2015, with gross domestic product contracting by 2 to 4 per cent.