Downwards
A reality that brokers, buyers and notaries know and accept is that prices go downhill until they are reflected in purchase contracts. Logical development, given that negotiations, special agreements etc. are involved, but the result is to create a climate of precision in real estate prices, which does not correspond to reality. The reasons are many, but the result is clearly reflected when comparing contract prices from purchase and sale contracts, with available real estate sales ads.
The comparison revealed significant discrepancies and in the example of seven sales in seven popular areas of Athens, the difference reached 34%. Similar properties were compared, in terms of area, surface and year of construction, but contract prices and advertised prices have a significant difference of 15% to 34%. It is pointed out that the real estate listings included in the comparison were close to the average of the area, while the more expensive or cheaper available options were excluded. Both purchases and sales are for the current year. The conclusions are that in the total of 84 purchases and sales that were examined, the prices of the advertisements were always higher than those of the purchases and sales.
The example of a property in Patisia is typical, where an apartment, with an area of 88.62 sq.m., was sold with a contract price of 126,000 euros (for full ownership), but in the real estate ads comparable properties (in age, area and area) are sold for quite a few more expensive, at 168,000 euros. This is a price difference of 33.33% for properties sold only 6 months apart.
In Kypseli, apartment 112 sq.m. and building in 1971, it was sold for 165,000 euros, according to the stated contract. In the ads, an apartment with the same area and age is sold for 200,000 euros. The difference between the selling price and the advertised price is of the order of 21.21%.
One of the most extreme differences was found in the sale of a 100.84 sq.m. apartment. and construction of 1964, in Pagrati. A contract was declared with a sale of 125,000 euros, while the prices of the ads, for similar properties, in the same neighborhood, are close to 195,000 euros. A deviation of the order of 56%.
Features
As market professionals point out, each property has special characteristics that are not reflected in the available data (in the Registry of Real Estate Transfer Values, of the General Secretariat of Information Systems), which could significantly affect its price, either making it more expensive or cheaper. An apartment can be sold very cheaply, because it may need significant renovation before it becomes habitable. Another may have significant additions (swimming pool, sauna, furniture) that follow and raise the prices. But even with this condition, the fact that there is a price difference in 100% of the sample, in 84 out of 84 cases, is a consequence that shows that it is a dominant fixed practice. Real estate is more expensive in classifieds than under contract.
COMPARISON OF FINAL SALES PRICES, WITH AVERAGE PRICES OF AVAILABLE ADS
| Region | Area (sq.m.) | Year of Manufacture | Date
Contract |
Purchase Price | Ad Price | Difference (%) |
| Polygon | 79,70 | 2011 | 07/2024 | 200.000 | – | 15% |
| Polygon | 80 | 2009 | – | – | 230.000 | |
| Pottery | 93,60 | 2008 | 08/2024 | 170.000 | – | 20,59% |
| Pottery | 91 | 2005 | – | – | 205.000 | |
| Putty | 73,78 | 2007 | 07/2024 | 250.000 | – | 34% |
| Putty | 74 | 2008 | – | – | 335.000 | |
| Patisia | 88,62 | 2011 | 02/2024 | 126.000 | 33,33% | |
| Patisia | 2005 | – | – | 168.000 | ||
| Cell | 112 | 1971 | 01/2024 | 165.000 | 21,21% | |
| Cell | 110 | 1971 | – | – | 200.000 | |
| Vineyards | 86,56 | 2011 | 01/2024 | 182.000 | – | 30,77% |
| Vineyards | 85 | 2011 | – | – | 238.000 | |
| Pagrati | 100,84 | 1964 | 01/2024 | 125.000 | – | 56% |
| Pagrati | 100 | 1965 | – | – | 195.000 |
Source: Real Estate Transfer Securities Register, available ads 17.09.2024
Negotiation, financial need of the seller and “black” money
There are many reasons why the final deal price is almost always significantly less than what the owner-seller was originally asking in his ad. The first has to do with negotiation. In many expert analyzes it is often stated that the supply is significantly less than the demand and thus the bargaining power is on the side of the sellers. This, while true, does not capture the true dynamics of a trade.
Real example, a seller who was asking 235,000 euros for a property of 105 sq.m. in Kypseli, received a purchase offer worth 210,000 euros. As he explained, the property had already been for sale for two months and he preferred to complete the process then, even with a lower price of 10.64%, than to wait an unknown period of time for better offers. Brokers give other examples of reasons for accepting lower offers, such as the time pressure a seller may have with potential debts or a liquidity emergency, while in previous years it was common for sellers to want a sale completed quickly because permanent movement abroad.
Usual practice
Experts also blame the practice of many owners of deliberately “inflating” the price in the advertisement in order to have room to drop it in the expected negotiation with the buyers. In the latter case, the difference does not exceed 10-15%, while the largest differences recorded, 20% or more, usually hide some pressure from the seller to complete the process quickly or that there is “black” money…
It is not unusual in the market for some transactions to have been carried out at a different actual price than that indicated in the contracts. In this way some try to avoid some of the taxation that follows any real estate transfer. Others use for the purchase funds they have, but cannot justify. In any case, those familiar with developments in the real estate market point out that although in the past such phenomena were more frequent, changes in legislation and stricter fines have worked to reduce them.
It is recalled that by the end of 2023, according to the data of the myProperty platform of AADE, in 338,511 declarations of transfer of properties, with a total value of 27.7 billion euros, in 42,613 of them the payment was made exclusively in cash (462,495 million euros) , while in 41,741 declarations the payment was partially made in cash (2.98 billion euros).
However, the days when some people bought real estate paying with “bags full of money” are over. From the beginning of 2024, real estate purchases and sales are made with payment from the banking system and significant penalties are foreseen for offenders. Specifically, a property purchase contract that records an advance payment, partial or full payment in cash is invalid and its transfer is prohibited, while the fine is at least 10,000 and up to 500,000 euros for each violation.
“Fictitious amounts”, real increases
As the comparison with contract prices showed, the phenomenon of “inflated” prices in advertisements creates a fictitious image of accuracy in the real estate market. But this does not mean that there are no price increases. Market psychology and the fact that many owners decide the commercial value of their property based on the sale price of similar properties creates upward pressure on property values.
It also remains true that there are fewer properties for sale than the market can and will absorb. Supply and demand are out of balance and prices since 2017 have been on an almost continuous rise. Looking at the example areas, we see that in Polygon the average price for homes for sale in the summer of 2024 was €2,194 per sq.m., an increase of 12.86% compared to 2023 (€1,944/sq.m.) . In Kerameikos the average price was 2,405 euros/sq.m. with an increase of 8.19% compared to 2023 (€2,223/sq.m.). In Goudi, the average price was 2,903 euros per sq.m. with an increase of 15.93%. In Patisia it was 1,528 euros/sq.m. with an increase of 15.85% from 2023 (€1,319/sq.m.). In Kypseli it was 1,886 euros/sq.m. with an increase of 13.34%. In Ampelokipi 2,779 euros/sq.m., plus 14.41% compared to 2023 (2,429 €/sq.m.) and finally in Pagrati where prices were already tight, the average price for houses for sale was in the summer this year at 3,184 euros/sq.m. with a 10% increase compared to 2023 (€2,894/sq.m.).
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