ATHENS – You almost couldn’t give homes away during Greece’s 2010-18 economic and austerity crisis that saw big pay cuts, tax hikes and slashed benefits leaving people unable to afford anything.
Home prices plummeted, rents fell and many units sat empty, begging for buyers. But no more. Greece’s accelerating recovery with the end of 326 billion euros ($355.1 billion) in three international bailouts in 2010, and the waning of the COVID-19 pandemic has made Athens a hot spot with buzz and appeal.
Overcoming its image as a grimy, concrete city with areas covered in graffiti and with few green spaces, Athens is also seeing whole neighborhoods converted from long-term residences into short-term rental platforms such as Airbnb.
Home prices in the capital climbed 12.2 percent in just October, almost 300 percent more than in Stockholm and even Paris, in the top tier of the world’s most desired and expensive cities to live in, said Bloomberg.
What’s also driving the surge is the Golden Visa program that offers rich foreigners 5-year residency permits and valuable European Union passports if they buy at least 500,000 euros ($544,633) in property.
That was doubled from a 250,000 euro ($272,3178) threshold in August by the New Democracy government in a bid to stop the trend of the foreigners – mainly Chinese – scooping up whole areas to make profits.
That also had driven out residents, reduced the supply of apartments and homes so much that it further exacerbated the rise in rents during a time when the cost of living has hit families and households hard, particularly at the supermarket.
“There are no properties on the market,” Lefteris Potamianos, President of the real estate association of Athens-Attica, told Bloomberg, citing the lack of supply and the Golden Visa effect.
Even lower-income neighborhoods and those that had been mainly industrial, such as the Gazi area filled with former warehouses, is seeing a surge in interest, the affluent able to turn them into lofts for rent.
It’s even worse in more upscale areas of Athens, such as Glyfada on the cost near the burgeoning 8-billion euro ($8.71 billion) development of the abandoned Hellenikon International Airport near there.
THE THIN RED LINE
A high-rise tower is already sold out and it’s expected the surrounding area, already one of the most expensive in the city, could become prohibitively so because of the demand to be near the sea and the development.
The project will offer 10,000 luxury residences, with the government not requiring a proviso to include any affordable housing and the site one of the most desired in the European Union.
There’s been limited new construction in comparison to the depletion of the market and Greeks who don’t own their homes – some 73.3 percent of Greeks do – pay up to 33 percent of their income in rent on top of exorbitant income taxes.
That’s far above the EU average of 20 percent and the rents and home prices are expected to continue to rise, said a report by the National Bank of Greece, adding to the woes of the middle-class and low-income with no way out.
For the decade from 2010-20 – most of it when Greece was undergoing an economic and austerity crisis – banks held off on giving mortgages as they struggled with a mountain of bad loans.
The figures are grim for a generation of the young wanting their own homes, many Greeks staying with their parents into their mid-30’s and couples putting off having children, leading to a decline in the population.
The government has responded with programs offering homeownership subsidies and for fixing older properties – there are scores of thousands of empty apartments that owners can’t afford to fix in Athens.
Mortgages as low as 1 percent were offered, but the problem has become is that there aren’t places to buy and those few available are so costly that even low interest rates aren’t offsetting that.
It was introduced in 2022 and offered 1.75 billion euros ($1.91 billion) in a package to make homes more affordable and reachable, which many applicants said isn’t working because of the still soaring prices, noted The Financial Times.
In June, 2022, a poll in June by the Athens-based Eteron think-tank showed 47.9 percent of people aged between 18 and 44 struggled or were unable to pay rent, the news site said, proving a dilemma for the government.
In 2023, some 500 million euros ($544.64 million) in low-interest mortgages were made available to qualified applicants between 25-39, the news site said, but it proved to be too little to counter the price surge.
Nikos Vettas, General-Director at IOBE, an Athens-based economic think-tank, said that while the measures were a step in “the right direction,” that housing would remain unaffordable as long as salaries stayed low.