Bringing objective values down to market prices an uphill battle

The Finance Ministry is gearing up to bring the country’s so-called objective values used to determine property taxes down to the level of market prices, with the aim of getting a new system up and running from January 1, 2018.

Two amendments tabled in Parliament late on Thursday provide for the formation of a coordinating committee under Minister Euclid Tsakalotos for the revision of objective values, and the creation of a Property Transfer Value Register.

The latter amendment foresees the utilization of the Property Value Bank database in the ministry’s integrated information technology system, fed by a constant flow of data that will provide the basis for a digital system to value properties.

This will be the forerunner to a new automatic system that will replace objective values. However, it will be extremely difficult for the committee to create a reliable system by the end of the year with only actual sale prices to rely on, as four in every 10 properties sold today fetch prices deemed particularly low even by today’s standards, which in turn illustrates the distortion of the local real estate market.

The data to be included in the Register will originate from the Independent Authority for Public Revenue, the competent Land Registry offices and notaries who cooperate with the ministry. The Registry’s objective will be to issue statistical conclusions on the property market. Part of the data, as stated in the legislation introduced on Thursday, “could be published in a way that would safeguard the anonymous character of the parties involved, so as to provide every interested party (citizens, professionals, entities etc.) with the option of obtaining a general picture of the property market for information purposes.”

However, property prices in Greece are still down by at least 40 percent in real terms. That means market prices are typically 40 to 70 percent below the objective values, and going rates may be hard to incorporate into the automatic system, given also the rarity of transactions nowadays.

For instance, a 102-square meter property in the northern Athens suburb of Aghia Paraskevi was recently sold for 20,000 euros, while its objective value stands at 127,500. In the southern seaside suburb of Alimos a 176 sq.m. house with an objective value of 422,400 euros was sold for 154,906 euros in April. The commercial value of the same property in 2008 was 563,200 euros.