Alpha: Where will this year's growth bet be judged?

Alpha: Where will this year's growth bet be judged?

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Encouragingly, the signals from the precursor indicators for the development of the second half of the year, however, the 2% target seems difficult, the bank emphasizes. "Key" real estate prices.

Posted: September 6, 2019 - 11:48 am

The Greek economy has entered a period of high expectations in recent months, despite the unfavorable international economic environment which poses significant risks, such as uncertainty surrounding Brexit, rising trade protectionism and the collapse of the German processing, which holds the growth potential of the entire Eurozone.

Economic activity is strengthening, with the rate of growth accelerating in the second quarter of the year and at a higher level than the growth rate of the Eurozone.

At the same time, Alpha Bank ALPHA notes + 7.00% in its weekly bulletin, the high expectations indicated by the course of consumer and business confidence indicators are the main determinant of the evolution of values ​​in real estate and bond markets, a consequence of strengthening the policy and the expected change in the economic policy mix, composing a friendly environment for entrepreneurship and investment.

According to ELSTAT's seasonally corrected data, GDP grew by 1.1% and 1.9% in the first and second quarters of this year, respectively. Examining the first half as a whole, the rise in public consumption as a result of looser fiscal discipline in the run-up to the election and the accumulation of stocks have contributed most to this increase in GDP.

The above performance in the first half of the year makes it difficult to achieve a growth rate of more than 2% for 2019 as a whole, especially in an environment of slowing down active demand from abroad as a high performance will be required in the second half of the year. The growth rate of the second half of the year will be largely determined by the impact of improved business and consumer confidence on investment and consumption.

In particular, the picture of the forerunners of economic activity indicators in the first two months of the second half is particularly encouraging. The & nbsp; Economic Climate Index returned to pre-crisis levels, reaching 108.4 points in August 2019, the best performance in almost the last twelve years.

At the same time, housing prices are rising sharply, which accelerated especially in the first half of 2019 (+ 6.3%), however, having covered only a small part of the large losses of the index since 2008.

In particular, compared to the age of the apartments, the price increase was marginally higher in the new apartments (up to 5 years), by 7.7% in the second quarter of 2019, compared to an increase of 7.6% in the old apartments (over 5 years old). It is noted that in both of these categories there is an increase in prices, both on a quarterly basis and on an annual basis.

The upward trend in residential property prices is due, among other structural factors, to buyers' discounts: (a) a permanently lighter tax treatment of real estate after the recent change in the tax framework and (b) a sustainable increase. income in the future as the country's development course is strengthened.

The impact of the resurgence of the real estate market on the growth rate of the economy may also be strong through investments in housing, which recorded an increase of 19.5% on an annual basis in the second quarter of 2019.

However, investment in housing - despite gradually recovering from the first quarter of 2018 and then recording positive annual changes - is significantly below 2007 levels. In particular, in 2007 they reached about 11% of GDP and collapsed to 0, 7% in 2018.

The factors that contribute to the recovery of the real estate market are the following:

• The synchronization between the financial cycle and the housing price cycle. From 2017 onwards, the recovery of economic activity has contributed to the stabilization of the housing price index and its gradual increase from 2018 onwards.

• The rapid growth of the real estate sharing market, which has strengthened the process of short-term real estate leasing, through some popular digital platforms, in the center of Athens and in popular tourist destinations. This fact is reflected in the large rise in house prices in Athens in the second quarter of 2019 (11.1%) compared to other areas (Thessaloniki: 7%, other large cities: 4.1% and other areas: 4 , 9%).

• Favorable changes in the tax framework of real estate, with ENFIA being reduced by an average of 22% from 2019, while the suspension of VAT payment on construction activity for three years is planned.

• The increase of investments in housing, for the sixth consecutive quarter, by 19.5% on an annual basis in the first quarter of 2019 (according to the recently published data of ELSTAT). The & nbsp; warming of investment in housing is linked to the significant rise in Net Foreign Direct Investment (FDI) in Greece for housing. According to data from the Bank of Greece, net FDI for housing amounted to € 343.9 million in the second quarter of the year, from € 207.8 million in the corresponding quarter of 2018 (increase of 65.5%), while in the first In the first half of 2018, the adoption of the "Golden Visa Greece" program, ie the granting of a residence permit in Greece to third-country nationals, acquire € 636.6 million from € 378.5 million in the first half of this year. property in the country worth € 250 thousand and over.

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