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Fiscal Crisis Drove Greece’s Rents Down, Rebound Spikes Them

Αssociated Press

A general view of the city of Athens with the ancient Acropolis hill on the background, Tuesday Jan. 28, 2020. (AP Photo/Petros Giannakouris)

ATHENS - With Greece slowly recovering from a near decade-long economic and austerity crisis that drove rents to the basement - still making many properties unaffordable - a burgeoning recovery is seeing them soar to prohibitive levels.

With new confidence in the New Democracy government that is helping spur a rebound by lowering corporate taxes and planning to do the same for the middle class, landlords are raising rents, said Kathimerini in a detailed report. Combined with short-term rentals like Airbnb taking over whole neighborhoods, driving out long-term residents in favorable of more lucrative transients, the spillover effect is seeing rents jump even in undesirable areas.

Rents have gone so high they are even over the levels before the crisis began in 2010 when successive governments turned to international creditors for what turned into three bailouts of 326 billion euros ($352.67 billion) that came with big pay cuts, tax hikes, slashed pensions, worker firings and the sell-off of state enterprises.

The fast-raising rents are hurting the lower-income, the paper said, with many households unable to afford where they had been living and forced to try to find cheaper and smaller apartments if they can, with ads for apartments showing huge jumps.

The soaring rents are undermining the government’s attempt to bring relief to the middle class and lower income sectors the former ruling Radical Left SYRIZA admitted overtaxing to appease creditors to get a third rescue package of 86 billion euros ($93.04 billion.)

Apartments are going for an average of 600-800 euros ($649.09-$865.45) monthly, which exceeds the total income of many families and especially pensioners, many of whom receive barely more than half that in benefits.

Even for those with a salary of 1,000 euros ($1081.82) a month, just the rent can come to as much as 70 percent of income, leaving little left for taxes, food, utilities, medical costs, pharmaceuticals, clothes and other basic necessities.

The hikes seem to be arbitrary and not based on economic indexes, with many landlords perceiving a bigger demand and driving up rents to match it, the report said, many building owners spiking the rent 20 to 30 percent almost overnight.

Lefteris Potamianos, head of the Potamianos Real Estate Group and President of the Athens-Attica Estate Agents Association, told Kathimerini: “We recently leased a second-floor apartment of 100 square meters, built in 2008, for 700 euros ($757.27) per month. Before the crisis such a property would have been rented for 500-550 euros ($540.91-$595.)

Data from online ad platform Spitogato showed rent hikes up to 30 percent in various areas of Attica over the last 12 months. Rates have risen 27.3 percent in Keratea, southeastern Attica, and 26.4 percent in the Piraeus neighborhood of Neo Faliro. In Gazi and Kypseli, in central Athens, the annual hike comes to 25.2 percent and 24.3 percent.

During the financial crisis, especially from 2011 to 2015, rental rates in Athens declined by 40 percent on average, followed by some stability before they started going up again and now jumping under New Democracy after Prime Minister Kyriakos Mitsotakis said after helping businesses with lower taxes he would bring relief to the middle class.

Over the last three years the average rebound of rental rates in Attica is estimated at 25 percent, though there are significant differences between various areas, with a number of factors - including psychological - bringing the jump.

Potamianos said: “There is clearly a far greater demand for renting compared to the years before the crisis. Then most people used to choose the solution of a mortgage loan and the acquisition of a house instead of renting.

Today the picture has been reversed, as very few households can secure the necessary funding for buying a house.” A big reason as well is the drying up of available properties with short-term rentals reducing the supply drastically in some areas, driving up the rents in other neighborhoods where people turn to look.

Potamianos also pointed to banks foreclosing on homes they are moving to sell after SYRIZA reneged on promises to stop that practice, and banks also holding on to them foir now until putting them back on the market.

“The people who used to live in them are now to a great extent living in rental properties, further strengthening the already high demand,” he added.

As many as 20,000 properties in the Attica region that encompasses Athens are now available only through short-term rentals as well, some 80-85 percent in the center of Athens, the most desirable for tourists.

Another factor, if smaller, is that the government is housing thousands of refugees and migrants in apartments while they await decision on asylum applications that can take two years or longer to process.

“It is possible that even more apartments have been absorbed this way than those advertised online as short-term rentals, as this concerns thousands of properties, often entire structures on various corners of the capital,” said Potamianos.

Many of the short-term rentals are in properties bought by wealthy Chinese investors to meet the benchmark of a 250,000-euro ($270,453.75) needed to get a Golden Visa that gives them five-year residency permits and a Greek, European Union passport.