Ex-Finance Minister Nikos Christodoulakis Says
Greece’s government should consider reducing the tax on house purchases to spur real-estate development and bolster economic growth, former finance minister Nikos Christodoulakis said.
“Large parts of Greece depend almost exclusively on the construction of housing,” Christodoulakis said in an interview in London yesterday. “The construction of housing is the locomotive of quick growth.”
The Greek economy is in its first recession since 1993 and Prime Minister George Papandreouhas raised taxes, cut wages and reduced spending as part of conditions imposed by the European Union and International Monetary Fund for 110 billion euros ($153 billion) in loans. The economy is expected to shrink about 4 percent this year and 2.6 percent next year, according to estimates from the Greek Finance Ministry.
“Greece is facing quite a few problems,” Christodoulakis said in a speech at an event at the London School of Economics organized by the college’s Hellenic Observatory. “Actually, it has sunk in a Bermuda triangle.” He also said that Greece faces “a mild recession next year.”
The former minister of economy and finance said the deficit and debt levels the government now faces were due to “a one-off fiscal catastrophe, not a systemic problem in Greece.” As a result, authorities should target boosting growth just as much as they’re targeting lowering debt levels and increasing tax- collection efficiency, he said.
The three ways authorities should spur growth in the short term would be to increase public investment, privatize and sell state enterprises, and provide incentives for real-estate development, he said. The latter “is the quickest way for Greece to recover,” Christodoulakis said.
“If such measures, to some extent, are successful and they change the pattern of recession, then you may see a very dramatic improvement in Greek indebtedness,” he said. “The crisis in Greece can be faced, but in order to have viable solutions we need not to only concentrate on reducing debt and collecting revenues, but at the same time, with similar priority, we have to think how growth can return to Greece.”
State revenue next year will be aided by a planned increase in the so-called objective values for real estate, Finance Minister George Papaconstantinou said on July 5. Taxes on real- estate transactions in Greece are based on the government’s assessment of the property’s value, which considers the area and the amenities, rather than the actual market value, which is generally higher.
By: Scott Hamilton
Experts are predicting that real estate investors in Brazil will no longer have to depend upon foreign buyers over the next several years, as the country’s growing middle class will be ready and able to purchase the properties they are trying to sale. This is largely due to the fact that the Brazilian government has implemented innovative programs that are designed to make it easier for lower income families to obtain a mortgage as well as to the fact that the country has been experiencing a significant amount of economic growth. In fact, mortgage interest rates have fallen into the single figures in 2010, resulting in a 77 percent increase in mortgage lending when comparing the first half of 2010 to the first half of 2009.
Due to the significant increase in lending, the construction industry has actually outpaced the country’s GDP. Still, experts do not believe the growth is just the beginning of a bubble of unsustainable growth. This is largely because experts believe the country has learned from the mistakes that have been made by other countries throughout the world.
“Brazil is not the US and neither is Bulgaria, Spain or Dubai. Whilst US banks granted up to 130% loan to value, in Brazil these rates are being curbed to a far more sensible average of 60%. Meanwhile, whilst the booms of Bulgaria, Spain and Dubai were fueled by, and dependent on, foreign speculators and holiday home hunters, the future of Brazil’s property market is assured by its own population,” said Samantha Gore, who is the sales manager for uv10, in a Property Wire article. “Brazil’s Real Estate Developer’s Association states that eight million families, or 30 million people, do not have their own house to live in and are currently renting sub-standard accommodation. This need, along with subsidized mortgages for Brazilians, will generate demand for new homes for at least the next 15 years.”
Experts go on to report that the growing middle class is enjoying greater access to mortgages, which has resulted in an unprecedented amount of house buying in the area. As such, experts believe this demographic provides the best profit potential.
“We work with a 20 year established developer who offers off plan properties well under market value to foreign investors as they pay in full more quickly,” continued Gore. “This enables the developer to seamlessly roll funds into his new project. They will also, with the help of a network of local agents, either organize the resale of your property to the local market or rent it out with or without a rental guarantee. As we’re talking about city center locations, neither the market price nor rental income is speculative but instead reflect thorough market studies.”
Currently, the company is offered units in Edificio Dr Geraldo Furtado in Petropolis, which is in northeast Brazil, at 20% below market value prices with an optional four year 5 percent rental guarantee.
Autore: Brian Kinkade