by admin Like many young Greeks, Christina Pappa had to look for a cheaper apartment in an Athens suburb after her rent went up and was relieved to find one through acquaintances. With a rent of 200 euros per month, she is lucky, the publisher notes. While Greece’s economy is growing at nearly twice the rate of the euro zone this year, thanks to a strong recovery in tourism, young people are increasingly being excluded from the property market due to the energy crisis, inflation, soaring rents and the reduced supply of small apartments. Christina, age 27, an aspiring actress, says it’s not the situation young people hoped for after a devastating debt crisis and a decade of austerity. “The energy crisis scares me a lot. I’m scared of the idea of how I’m going to manage and continue to live on my own,” she notes. Rising rents and unaffordable housing are a problem in many industrialised economies, but in Greece it is particularly acute, as living standards and household wealth have already been hit by the debt crisis that began in 2009 and the years of austerity that followed. The rent of Christina’s new 25 sq.m. apartment in Neo Psychiko does not include utility bills. Christina moved in last month after the rent on her apartment in Kaisariani rose by 12.5%, bringing the total monthly expenses, including utility bills, to €500, making it “hard to make it through, when your salary is 650 euros per month”. As she notes: “a lot of people in my age group are faced with the same problem. They either choose a roommate or continue to live with their parents. You can do that when you’re 19, but not when you’re older.” A poll by the Athens-based think tank Eteron this year found out that affordable housing was the top concern of 83% out of 1,007 respondents, aged 18-44. Almost half of the respondents said that they were struggling or were unable to pay their rent, while 77% were barely making it through.
Inflation bites
While the Greek economy has shown resilience, with annual growth at 7.7% in the second quarter of 2022, inflation is near the three-decade high of 12%, which is one of the highest percentages in the eurozone. Greek Statistic Service’s (ELSTAT) housing cost index, which reflects rents and mortgage costs, jumped by 35.4% on year-on-year basis in September 2022, with electricity and heating oil prices increasing by 30.5% by 65.1%. This cost impacts on disposable income, which for the average Greek household, has increased by 13% since 2018, says Nikos Magginas, chief economist at the National Bank of Greece. He attributes the rise in rents mainly to “an overly tight market during the (debt) crisis”. “We are now undergoing shock from the combination of rising energy prices, food and housing costs. So far, this has not had a major impact on the economy as the government supports weak incomes, but there are concerns if this continues into next year”, he explains. Residential property prices in Greece fell 42% during the debt crisis, but are now up more than 29% from their lowest point in 2017, according to the National Bank of Greece. The recovery has also pushed rents up.
There are additional factors that play role in exacerbating the problem, according to the real estate agents. On the supply side, a large proportion of the small apartments of 45-50 sq.m have been turned into Airbnb apartments for tourists, while prospective home buyers are faced with tight bank controls. Bank caution underpins financial stability, but it could also keep young workers out of the property market for decades. “The situation is difficult…we will see many (young people) returning to their childhood rooms,” said Themistocles Bakas, president of E-Real Estate Network, adding that home ownership in Greece has fallen by 2.9% points over the past three years, to about 73%. “After a decade of economic crisis and a two-year pandemic it is difficult for a young person to have saved 45,000-60,000 euros for the deposit of a 150,000-euro apartment”, he notes.
In most Greek cities rents rose, but central Athens saw the biggest increase, up to 40% over the past four years. Aware of the crunch, Reuters News Agency notes that the government announced a €1.74 billion program last month. The government has increased the annual housing subsidy for students to 1,500 euros from 1,000, and to 2,000 if they choose a roommate. Also, a pilot program of low-interest loans for the purchase of apartments (built before 2007 and up to 120 sq.m) will be launched in January. Officials expect around 10,000 young couples aged 25-39 to take advantage of the scheme, which offers a 1% interest rate on loans of up to €150,000. However, Stefania Papadopoulou, a 20-year-old student who earns €35 a day as a waitress and relies on her family for financial support, says fleeing the country is the only way out. “We came out of a crisis to enter another, more difficult one”, she told Reuters and added, “if something doesn’t change, I definitely see my future abroad.”
Source:
Anonymous, 26/10/2022