According to reports, prices of luxury properties on the Greek islands are being slashed by up to 45%, as owners look for quick sales to avoid paying the higher taxes of the government’s new austerity measures.
Property publication Property Wire brought to light a half built villa on Mykonos being offered by Athens broker Ploumis Sotiropoulos at the €500,000 reduced price of €2 million, a reduction, and a three bedroom property on Corfu down from €1.4 million to€750,000.
“It’s a scary place to invest right now. Things aren’t going to improve until the economic picture becomes clearer,” said Mike Braunholtz, a broker at Prestige Property Group which markets properties on the Greek islands.
The latest problems are being caused by the government imposing additional taxes on properties over 500,000 Euros, and a further tax again on properties worth more than 5 million Euros.
“The tax overhaul is certainly a concern for property investors in Greece. These measures specifically target the rich, higher end buyer,” said Liam Bailey, head of residential research at Knight Frank.
House prices on the mainland are also falling. Another Ploumis Sotiropoulos property in Ekali has seen its asking price cut by 48%. The 4,800 square foot villa is now selling for €2 million.
“It’s tough this year. More properties are on the market and fewer buyers are willing to invest,” said Giannis Ploumis, the chief executive officer of Ploumis Sotiropoulos.
But even at these heavily reduced prices, sales will still be incredibly difficult to achieve until Greece’s socio-economic turmoil is over.
Because higher taxes are not the only problem the austerity measures are causing. Industrial actions and protests have become commonplace in Greece, in protest of the austerity measures, and have even spilled over into the occasional riot.
This has led to the British Embassy along with other bodies warning tourists over the potential for disruptions. This is a very bad thing for an economy and a property market so reliant on tourism.
And if that weren’t bad enough news recently broke of a newcomer terrorist group threatening to target the Greek tourist trade. The threat has not been taken too seriously by authorities, with the British Embassy maintaining the warning on the protests alone. However, for many families it will not be worth the risk, especially given the potential for disruptions anyway.
All in all it doesn’t look good for the luxury property market in Greece or for any other property segment for that matter.