Marginal quarterly decrease of residential property prices in 2015Q2.

• The deceleration of the quarterly decreases in the RPPI intensified in 2015Q2.
• On a quarterly basis, the RPPI (houses and apartments) recorded a marginal decrease of 0,4% in 2015Q2. House prices and apartment prices recorded quarterly decreases of 0,4% and 0,6%, respectively.
• On an annual basis, the RPPI recorded a decrease of 5% in 2015Q2, exhibiting smaller decelerating rates for the fifth consecutive quarter.
• The broad economy has exhibited signs of recovery with GDP recording positive growth rates in 2015, while the demand for properties continues to record positive annual changes. These developments are expected to support the stabilisation of residential property prices.

Residential property price indices

On a quartely basis the RPPI recorded a marginal decrease of 0,4% in 2015Q2, exhibiting intensified deceleration of the decreases. Provided that this trend and the improvement of the conditions in the broad economy continue, prices are expected to stabilise. House and apartment prices decreased by 0,4% and 0,6%, respectively, compared with 0,8% and 1,5%, respectively, in the previous quarter (Chart 1). It is worth noting that the quarterly decreases in both house and apartment prices are the smallest in the last five years. Under the current circumstances, residential property prices are expected to stabilise around the average price levels of 2006, the year in which the over-lending for housing (as measured by the outstanding amount of housing loans) began, leading eventually to the overheating of the sector. The enactment of the foreclosures law in May 2015 is expected to contribute to the financial soundness of the banks and, in general, to the normalisation of conditions in the broad economy. The implementation of the foreclosures law is not expected to substantially affect immovable property prices. The main aim is to put pressure on strategic defaulters who can but choose not to service their mortgage, and to resolve old cases that have been pending for years in the courts.
On an annual basis, the RPPI declined by 5% in the quarter under examination, compared with a decline of 6,5% in 2015Q1. House prices declined by 4,6% on an annual basis and apartment prices by 6,2%, compared with annual declines of 6% and 7,7%, respectively, in 2015Q1 (Chart 2). Chart 2 shows the deceleration of the annual decreases since 2014Q1.

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