Economy

Stocksak: Young Greeks priced out by inflation, rents soar


© Stocksak. Christina Pappa, 27, a drama school student uses a washing-machine in her Athens apartment, Greece, October 15, 2022. REUTERS/Stelios Misinas

By George Georgiopoulos & Lefteris Mamadimas

ATHENS (Stocksak). Christina Pappas, like many young Greeks, had to search for a cheaper flat in Athens after her rent went up. She was relieved to discover one through word-of-mouth.

She was able to get lucky at 200 euros ($197.20 per month).

Despite Greece’s economic growth exceedingly fast that of the euro zone rate this fiscal year, thanks to a strong rebound in tourism, young people are becoming increasingly priced out the property market by the energy crisis, inflation and soaring rents.

Pappas, 27, a aspiring actress, believes it isn’t the dividend many young people hoped to receive after a decade of austerity, a ravaging loan crisis, and a decade of debt.

“The energy crisis scares my a lot. That in such a short time we would have such a rise in prices in such a short amount of time. I am afraid of the idea of how I will survive and continue to live alone,” Pappas said.

Rising rents, unaffordability and rising housing costs are problems across many industrialized countries. But in Greece it is especially acute since household wealth and living standards were already severely affected by the 2008 debt crisis.  

Rent on Pappas’s new 25-square-metre (269 sq. ft) apartment in Neo Psychiko is not inclusive of utilities.

After the rent on her Kaisariani flat in Athens increased 12.5%, she moved last month. The total monthly cost of utilities and rent was 500 euros. It was “hard to make ends meets when one’s salary is 650 euros per month.”

“Many people in my generation face the same problem.” They choose to either find a roommate, or they live with their parents,” she explained. “You can do this when you’re 19 but not later.”

This year’s Eteron poll revealed that affordable housing was a top concern for 83% (from 1,007 respondents) aged 18-44. Nearly half of respondents said they had difficulty paying rent or were unable. 77% struggled to make ends meet.

INFLATION BITES

The Greek economy has been resilient, growing at 7.7% per year in the second quarter. However, inflation is at 12%, the highest level among the 19 euro-member countries.

The cost of housing indicator from the Greek Statistics Service, which tracks rents and mortgages, increased by 35.4% in September. Electricity prices were up 30.5%, and up 65.1%.

This is reducing disposable income, which has risen by 13% for the average Greek household since 2018, according to Nikos Magginas (chief economist at National Bank).

He attributes the rise in rents to the “overly depressed market” during the (debt crisis).

“Now, we have a shock due to the combined price increases in energy, food, and the cost housing. He said that although it has not had any significant effects on the economy so far, the government supports incomes low enough to make it possible. However, there are concerns about what will happen next year.

According to the Bank of Greece, although residential property prices in Greece plunged 42% in the debt crisis, they are now more than 29% higher that their low in 2017. Rents are also rising due to the rebound.

Real estate brokers claim that there are additional factors that can contribute to the problem.

On the demand side, a large portion of small 45-50 meter flats have been converted to Airbnb apartments for tourists while potential home buyers face stricter banking standards. The ratio of mortgage loans to their value has dropped to 70-75% from more than 100% prior the debt crisis.

Banks’ caution not only supports financial stability but could also keep young people off the property ladder over decades.

“The situation is difficult… we’ll see many returning to childhood rooms,” stated Themistocles Bakas of E-Real Estate. He also said that home ownership in Greece has fallen by 2.9 percent in the last three-years to around 73%.

He said that it was difficult for a young person after a decade of economic turmoil and a two year pandemic to have saved 45,000-60,000 Euros for a downpayment on a 150,000-euro apartment.

Rents have increased in most Greek cities, but central Athens has seen the largest increase, up to 40% in just four years.

Last month, the conservative government of the country launched a 1.74 Billion Euro relief programme in recognition of the financial crisis.

The annual housing subsidy for students was increased to 1,500 euros, from 1,000, and to 2000 if they choose to live with a roommate. In January, a pilot program of low-interest loans will be launched to purchase apartments up to 120 square meters and built before 2007.

Officials estimate that approximately 10,000 young couples between 25 and 39 will benefit from the program offering 1% interest on loans upto 150,000 euros.

Stephania Papadopoulou is a 20-year-old student who makes 35 euros per day as a waitress but relies on her family to provide financial support. She believes that leaving the country is the only option.

Stocksak told her that she and her husband emerged from a crisis to face another, more difficult challenge. “Unless something happens, I see my future abroad.”

News Source and Credit

Stocksak Editorial

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