The property market had its share of recession, and finally, when it was ascending after all these years, coronavirus happened. The outbreak of this epidemic has shattered the economy of a lot of countries, which is leading foreign investors to think whether their investment went in vain or not.
Although most people thought that their trepidation was coming true, experts are saying otherwise. Today, we’ll discuss how the house prices in Greece will continue to grow in 2020 and 2021. But before that, we’ll cover how the house prices rose back in 2019.
Rise of Prices in 2019:
After nine long years of recession, house prices in the urban areas of Greece faced a rise of 9.32% in the third quarter of 2019. The last time when the house prices rose high before this was in 2004, and the percentage was only 2.35%. As you can see, the rise was significantly higher!
This momentum was also experienced by the major cities of Greece. For example, the prices in Thessaloniki rose by 8.52%, which is a huge leap from the previous rise of 1.32% back in 2007.
The house prices in Athens had risen by a percentage of 11.91 in the third quarter of 2019, the highest since the rise back in the second quarter of 2006, which was only 2.21%.
In other cities of Greece, the prices rose by the percentage of 6.87 in the third quarter of 2019, which is a significant leap from 0.8% y-o-y rise.
If you’re wondering what happened in between, let me fill you in. The prices of houses in Greece from 2008 to 2018 fell by a sharp 40.8%! Now you may question how the housing prices started rising so sharply, well, this is how:
The Greek government recognized this as a great opportunity for increasing FDI, and they seized it. They started offering residence to foreign investors who invested worth €250,000 in their property business, even if they were non-EU residents. This arrangement would be valid for five years and can be subjected to renewal.
They took further decisions that would strengthen the prospect and make it more viable not only for the foreign investors but the locals as well. These are:
- Suspension of VAT payments on unsold properties and new building permits
- Single property tax reduction
In the past, the high taxes were discouraging the investors, but as soon as these decisions were taken and implemented, the investment came flooding in, and the result was phenomenal.
In 2019, it was seen that the real estate sector had risen to €1.45 billion, which was a 28% rise from 2018. Not only that, real estate alone had contributed 35% to the entire FDI of Greece, which amounted to €4.1 billion in total.
Impact of Coronavirus on the Property Business of Greece:
COVID-19 sure took its toll on the property market of Greece, just as it affected the rest of the world. Just like our lives, the marketplace seems frozen. The government was forced to shift its attention towards containing the virus, and the investors grew negligent due to the rising uncertainty.
Foreign demand was the driving force of this marketplace, but it’s not there anymore. Even major deals that were made before are being stalled, or simply canceled. So, we can say for sure that, the marketplace is affected by a coronavirus.
After the coronavirus situation is finally normalized, the investors aren’t expected to make their move quickly. Rather, they’ll assess the core market and their place in it. If it’s found that the pandemic has shaken the core market of Greece, the chances are that they’ll hold themselves from investing in it. However, the chances of this are scarce.
Shift from Short-term Rental to Long-term Modules:
Real estate is a sector that’s dependant on other sectors largely, and one of the major sectors that real-estate is dependent on is tourism. Due to the high tourism of Greece, a lot of property owners had been following the short-term rental method for ensuring maximum profit.
However, the tourism sector has come to a standstill due to the pandemic, and the short-term rental module is no longer viable. This is forcing the property owners to shift from a long-term business module.
It’s found that a lot of landowners are indebted as they had taken considerable amounts of loans to finance their property in the first place, which they had expected to pay off with the earnings from the short-term rental method.
As this isn’t a viable option anymore, they are settling for the long-term rentals nowadays, and as most of these properties are well-furnished, the prices are high as well.
On a brighter note, the property owners will soon be forced to adjust their prices due to pressure from the competitions, and there will be a significant level of competition, as most property owners are shifting.
After the dust settles, the remaining property owners will slowly shift to the short-term rental services again, and this shift will be more professional as we can expect professional firms to emerge and manage these properties. This will ensure stable growth in 2020 and 2021, which will make property prices grow.
How may the Property Prices Start Growing Again?
The property market of Greece, just like any other property market in the world, took a great hit from the COVID-19 situation. As the real estate business of Greece is heavily dependent on the tourism sector, which is at a standstill at this moment, the property market is frozen as well.
The prime factor behind the downfall of Greece was its government, and now that Greece is on the rise, the government is to be credited. The present government took decisions that led to this upsurge of foreign investment in the property business of Greece.
They have already acknowledged that the tourism sector of Greece will define how the property market will progress further down the line, which is completely rational. They are taking great measures of making Greece free from coronavirus, and they are succeeding at it too. If all goes well, then tourists will face no hesitation before visiting Greece.
It’s a relief that a lot of important steps are already being taken so that Greece can phase-out of this smoothly. The government of Greece has already reopened land registries, and they are allowing court proceedings that relate to foreclosures and mortgages.
Conclusion:
As you can see, the property business of Greece was growing due to the plans set in motion by the Greek government. However, as the coronavirus struck the marketplace, it remains in a frozen state along with some other sectors that are interconnected with it.
Indeed, the Greek government is already taking steps to overcome this, and they have plans that will revive the growing real estate business. So, we can expect that the house prices in Greece will continue to grow in 2020 and 2021, as a suitable environment will be provided for sustained growth.
