Crisis brings sea change to Greek housing market

“What we are experiencing is the end of the era of home ownership in Greece as households can no longer save to buy property,” says Nikos Hatzitsolis, chief executive at real estate firm CB Richard Ellis-Axies, underscoring the fundamental changes that the crisis has triggered in the Greek property market.

This change, the experts explain, is not just evident in the case of those just flying the nest who wouldn’t be in any position to own their home anyway unless it was given to them by their family, but also existing homeowners who are opting to leave their property and rent it out or sell it.

“Around 70 percent of homeowners are becoming renters because they choose to sell their property to pay off debts such as mortgages, late taxes or credit card debt,” says Lefteris Potamianos, vice president of the Athens-Attica Estate Agents Association. “If any money is left over from the transaction, it is not reinvested in another property, as was the case in the past, but used to rent another home. Basically, the dream of ownership that drove past generations has come to an end.”

A significant percentage of homeowners choosing to rent out their home and lease a different property for themselves also consists of young people who see their accommodation requirements increasing, due to the birth of a child for example, or want to live in an area with better schools or security.

“We are seeing more and more such cases in the property market,” says Potamianos. “Given that sales prices are very low and it is hard to find a buyer, many owners prefer to rent out their property and then rent another for themselves, as getting bank funding for a purchase is incredibly difficult. Some even move around to see which area suits them best. Renting has this flexibility, allowing you to relocate if you’re not happy.”

For the overwhelming majority, however, renting is the only option, as buying is seen as bringing no advantages whatsoever anymore.

“Even from a purely economic perspective, it’s not worth owning a home today. In contrast, people who rent avoid all the additional tax costs and are not exposed to the instability of the tax framework for real estate assets, which has become a tool of politics and results in no taxpayer knowing what tomorrow will bring,” explains Hatzitsolis. “Previous generations believed that buying houses was a form of investment. This is no longer the case, as we’re seeing a completely different mentality in younger people.”

The expert also draws attention to the cases of people who are stuck with their properties.

“I know an owner who inherited a house in [the upscale Athenian suburb of] Ekali and has to pay 80,000 euros a year in property tax,” he recounts. “At best, the house could fetch 50,000 euros a year in rent, which means that this man has to cover losses of 30,000 euros every year, something that is a complete dead end.”

This owner has little choice but to sell, says Hatzitsolis, adding that such cases also explain why an increasing number of people are refusing their inheritances.