Dreams dashed in Greek homes market bust

By Angeliki Koutantou
ATHENS (Reuters) - Dia Tsouloukopoulou walks through the concrete slabs of her unfinished apartment in Athens talking about what might have been if the builder hadn't gone bust.
"The living room would have been here," said the 37-year old, making her way through the dusty construction site still missing windows and doors. "Here I had planned to have my kitchen, there a laundry room and a bedroom for my guests."
Her two storeys of plastered brick walls with no power, water or heating, are not the only unfinished project in the area. About a dozen other such buildings stand empty in the neighborhood and more in other growing areas of Athens.
Construction accounts for 11 percent of Greece's GDP -- a significant factor taking the economy into recession after years when Greece grew by about 4 percent annually, well above its euro-zone peers. This recession will be its first since 1993.
The problems of Greece's homes market pale in comparison with those of Spain and Ireland, but the pain is seeping through the economy.
Like many Greeks taking advantage of booming growth and low interest rates to buy their first home, Tsouloukopoulou, who is single and works for a mobile phone operator, has a mortgage (for 160,000 euros or $225,200 in her case) on a building that is now unlikely to be finished.
About 80 percent of Greeks own their homes, the fourth biggest rate in the euro zone. Now many are giving up hope of getting onto the property ladder.
"Construction is about 8 percent of Greece's 4.5 million workforce, excluding unregistered employment," National Bank analyst Nikos Magginas said.
"But its impact on economic activity is even bigger, as it is interconnected to other heavyweight sectors, such as financials, insurance and real estate."
Realtors say home and commercial building sales fell about 35 percent last year and the outlook is gloomier for 2009, despite falling prices.
"The full year of 2009 will be as bad as the first quarter as buyers are waiting for prices to fall further and banks do not lend money as easily as they used to," the Athens head of a real estate brokers' association, Ioannis Revythis, told Reuters.
UNSOLD HOMES
About 135,000 properties, mostly residential, remain unsold in Greece, compared with well over one million in Spain and about 70,000 in Ireland.
Greek house prices fell for the first time since 1994 in the first quarter, dropping about 1.7 percent year-on-year, central bank data show.
Economists say that is a smaller fall than Spain's 6.8 percent decline and Ireland's 9.8 percent, because supply has exceeded demand there for years and household exposure to home loans was already twice as high as a percentage of GDP. Continued...
Source: Reuters