Buyers Behaviour And The Housing Bubble In Greece

During the period 2004-2007, there was a peak in both housing construction and house prices in Greece. Two important changes in the real estate tax regime were early announced, which were extensively promoted by the mass media and real estate professionals, in a way that anticipated significant increases in real estate prices: the imposition of VAT on real estate and the drastic tax increases on real estate transfers from the beginning of 2006. The question posed and investigated in this work is the following: given the favourable economic environment, this work investigates to what degree and in which ways, were home-buyers influenced by the views presented by the mass media, in order to proceed to the acquisition of a privately-owned dwelling? Based on both social psychology and behavioural economics approach, a survey was performed with a questionnaire, which was answered by people who had bought their home during the study period, in two Greek cities. Home-buyers were informed about the imposition of new tax regulations and considered that house prices would continue to rise. They were not directly influenced by the messages received from the mass media, but through discussion with members of their family, they reached the pessimistic conclusion that the acquisition of a privately-owned home would be more difficult in the future and, therefore, they felt they had to proceed with buying a dwelling as soon as possible.