The Greek government is making a major improvement to how your Greek home’s value is determined. If you are buying a home in Greece, this means more transparency into your home’s value, and more fair, consistent rules for the taxes you pay.
Why Does This Matter If I Want to Buy a Home in Greece?
The transfer tax you pay at the time of buying can be dependent on the “objective value” of the property. By having more clear, equitable rules for the valuation of properties in Greece, you know the amount of tax you pay is appropriate for the property. Also, if you are an investor, the new valuation system gives you more reliable data to make an informed investment decision.What is “Objective Value?”
The objective value is an estimation of a property’s worth that is calculated by the tax office. It is based on objective criteria, independent of the sale price. When you buy a property in Greece, the transfer tax is based on the purchase price or this objective value of the property, whichever of the two is higher.
What Determines the Value of a Property in Greece?
The following factors likely play a role in how objective values are decided.
1. Location
Perhaps the most important factor in a property’s value is its location. While this is a cliché in the home market, properties in tourist destinations or near a beach will generally be worth more. In remote areas, homes generally have lower values.
2. Home Size & Usable Space
Many factors go into the value of a property when looking at on-site features. This includes the architectural features and the layout of the home, the floor on which the apartment is located, recent maintenance, and whether it is furnished.
3. Age of the Property
It’s also important to take into account how old the property is. Older properties, as expected, have lower values. Newer properties are more expensive. Renovations also play a role. For example, older properties which have renovations are likely more valuable than old properties without renovations.
4. Renovation Potential
Homeowners also like to know if a property can be upgraded. For example, if you can increase the floor space, add an extra storey or bedroom, or add a pool, the property is likely worth more. This is because buyers value the ability to customize a space. Note that in Greece, the ability to add extensions to a property could also be limited by Greece’s Forest Regulations.
Note that this is not an exhaustive list, and there may be other factors that affect objective values in Greece.
Why Is the Selling Price Different Than the Objective Value?
1. Local Supply and Demand
The supply and demand of the local market play a role in property values. Interest rates and economic conditions also are important to watch. In a seller’s market, demand is high and supply is low, so property values will increase. In a buyer’s market, supply is high and demand is low, so property values decrease. In a seller’s market, homes usually sell more quickly, and in a buyer’s market, homes stay on the market for a longer time. Greece in 2023 is a seller’s market in most popular areas because demand is higher than supply.
2. The Greek Market
The local market in Greece is on an upward trend. According to data from the Bank of Greece, in the first quarter of this year, the rate of house price growth in Greece reached record highs. More specifically, prices rose 14.5% year-on-year in Greece as a whole, and even sharper spikes were seen in Greece’s two largest urban centres, reaching 16.5% in Attica (the region which includes Athens) and 16.1% in Thessaloniki.
3. Interest Rates
Yes, this is the boring economics part, but it’s important when considering property values. A rise in short-term interest rates (for example, what you pay on a credit card or on a short-term loan) makes short-term debt more expensive. For example, if you’re spending more money paying off a credit card or short-term loan, you will likely have less money available to pay for a house.
In Greece in 2023, interest rates increased, and banks were less willing to lend. If customers get a loan, the money is more expensive. This is why more buyers in Greece are choosing off-plan properties.
4. Prices of Neighboring Homes
One of the best ways to assess the value of a home is to look at sale prices of similar homes in the neighborhood that sold recently. You might hear these homes referred to as “comps.” In general, if you have a home appraisal done by an agent, real estate experts will use comps to help evaluate your home’s value.
