House prices to continue falling in 2011, BoG

House prices will continue falling this year after falling by 3.7 pct in 2009 and 4.0 pct last year, the Bank of Greece said on Thursday.

In a report on the domestic real estate market, the central bank attributed its pessimistic forecast to the fact that households remained cautious, excessive supply, a significant inventory of unsold homes and a squeeze in bank funding. Greek households are affected by increased uncertainty over employment and their future incomes, while most households have also postponed the purchase of new homes anticipating a further decline in prices over the next few months.

The report said house prices fell 8.1 pct in the last quarter of 2010, compared with the same period in 2009, for newly-built homes, and by 4.0 pct for older ones. House prices fell 4.4 pct (newly-built) and by 3.8 pct (older ones). In a geographical analysis, house prices fell 5.1 pct in Athens in the fourth quarter of 2010, by 9.0 pct in Thessaloniki, by 6.1 pct in other large cities and by 4.9 pct in other regions of the country.

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