ARiadni Real Estate Blog

The year of the real estate is 2020

23 February, 2020

High expectations for the real estate market in 2020, which, according to the "optimists", are expected to "explode" in the first half of this year, following the introduction of tax cuts such as the reduction of ENFIA by an average of 8%, its suspension VAT on newly built houses and tax deduction for renovations. On the other hand there are pessimists who point out that the recovery is not uniform and the market is still moving at three different speeds.

• Mobility in properties of tourist or student interest where prices and rent increases

• Sparse transfers of real estate to areas of interest with stagnation in previous year's prices

• Lack of demand in the vast majority of real estate in the country, where we continue to have moderate reductions, especially in places with declining population and high unemployment

Signing the two major decisions, reducing the ENFIA and deducting up to 40% of the renovation tax expense in 2020 is expected to be particularly favorable, with a 24% VAT exemption expected to work were manufactured with a building permit from 1/1/2006.

 It should be noted that VAT (24%) on new real estate transactions acted as a disincentive for investment in new housing, while not having a particular fiscal result, as the related revenues do not exceed EUR 15 million on an annual basis. Suspending the application of VAT to the building for three years brings to the surface real estate that has remained marginal because of their high taxation. With this move, it is estimated that more than 90,000 properties are "for sale".

It is not excluded this year that further changes in property tax rates related to the rates of inheritance and parental benefit tax will be made. 'All property from 2006 (the year that VAT was first applied to the building) sold after the law was published will be exempt for three years from VAT and buyers will pay the transfer tax as it is today and for the old real estate.

A concern of the government's financial staff is the fact that a 24% fall in property prices may not pass the market. The builders cannot exclude the increase in demand in order to increase their profits as they did in the golden period of construction which demanded huge sums for the properties they built.

Investors

Attraction for foreign and domestic investors is expected to be the 90,000 cheaper real estate. Foreign investors are expected to increase this year with the Golden Visa program, where Chinese, Russians, Turks and others acquire at least 250,000 euros in property and secure a residence permit in the country.

Demand for short-term rentals through Airbnb has increased due to tourism, although supply is constantly rising, and it is possible to see a drop in prices. On the other hand, the demand for large apartments remains low and there is a shift to smaller new or older properties.

Ownership rate of 84.6% in 2005 fell to 73.9% at the end of 2016 and its course appears to be declining, with many giving up inheritances unable to withstand the burden of home lending. zero practices.

Objective values ​​of real estate

Fair values ​​are a puzzle that is expected to affect the market because of the fair value adjustment expected by the financial staff in April. The goal is to get as close as possible to the real (commercial) real estate values. This is not easy to reconcile, because in some areas, the objective-trade price gap can be as high as 60%. Even compared to 2018 where the first attempt to adjust zone prices was the picture and prices in some areas are completely different today as Golden Visa and Airbnb have completely changed the landscape of prices.

The real estate market at the end of 2019 compared to the beginning of 2020

The new year came with the forum she left in 2019. The year that passed us at the Treasury Department's Register of Real Estate Transfers (MAMA) saw approximately 26,000 real estate transactions recorded against 26,769 in 2018 and 17,324 in 2017. most of them are recorded - as is natural - in the Prefecture of Athens, while more than 14,000 transfers occur in downtown Athens in the three-year period 2017-2019. Correspondingly, in Thessaloniki, about 8,800 transfers were recorded in the same period. Indeed, as market players note, the number of transfers is almost three times higher when considering the official data of ELSTAT on the work of notaries on an annual basis.