By Nikos Roussanoglou

Construction activity registered its biggest decline since the start of the crisis in September, according to Hellenic Statistical Authority figures, illustrating the severe and ongoing deterioration of the local property market.

Based on the number of building permits issued, total construction activity in September amounted to 60.4 percent less than a year before – representing a 56.2 percent drop based on surface area and 47.1 percent based on volume. The 1,449 permits issued corresponded to 286,300 square meters and 1.26 million cubic meters.

Despite the steady decline in construction since 2007, having posted a total drop of some 75 percent since the 2005-06 period, the contraction of the market is showing no signs of ending. If anything, the indications point to an acceleration in the industry’s decline rate.

The data illustrate that many construction firms are avoiding new building contracts in a bid to contain the oversupply of houses and reduce the stock of unsold apartments. A large part of that stock is already proving to be a considerable financial burden on the firms due to the Property Tax introduced in 2010, a problem which will be exacerbated by the single real estate tax as of the new year. Unsold apartments are estimated to number 180,000 across the country, with that level remaining unchanged since the start of the financial crisis some three years ago.

The intermediary monetary policy report by the Bank of Greece showed that this large stock of unsold houses is attributed to the fact that the decline in private construction and in investment in the market was proportionate to the drop in the number of house transactions. This has resulted in the number of unsold houses being slightly higher than at end-2008. If activity keeps dropping and transactions do not fall further, then the stock may start diminishing soon.