There are many analysts in Greece who insist that the Greek property market has none of the symptoms of the real estate crisis found in other countries as for example in the USA, England or Spain.
The arguments supporting this are briefly presented below and are quite interesting to know.
Even in Crete, most interested buyers – especially locals – are buying a house in order to live in it on a long term basis. More specifically Greeks buy either to use the property as a permanent residence or in order to rent it out and in the future pass it on to their children to be used as a permanent residence.
Additionally, the largest percentage of citizens from other countries who buy in Crete are looking for a property that will be used as a permanent residence or as a temporary holiday home before they become all year around residents.
Here lies a major difference with other countries that were considered real estate hot spots. In other countries, most people bought a property as a short term investment hoping that they can sell it in 1 or 2 years and make a profit. Spain today, is facing major problems exactly because the vast majorities were buying in order to sell and gain profit in a short period of time.
Today, it is obvious that one of the reasons behind people still continuing to purchase in Crete is because they are not after profit but rather are materializing a long term dream of living under the sun. This is what is keeping the real estate market moving especially around cities as is Chania, along with the belief of Greek buyers that buying a property is always a wise long term investment choice.
However it must be noted that a number of people also came to Crete in order to buy and make a quick profit. It is also a fact, that whoever bought or is planning to buy with the prospect of selling with a profit in 1 year or less will have a hard time achieving it. This was possible and feasible prior to the financial crisis but not now.
In a article published in the Greek national newspaper, Vima on the 9th of November 2008 it was noted that the percentage of housing loans in Greece are held by only 20% of the families living here. In Western Europe this percentage is up to 80% for some countries. Again the economy here is safer when compared with other countries from the point of view that the number of people who are paying a housing loan is quite smaller.
Greeks today do not wish to get a housing loan, even if they qualify for it, due to the increasing interest rate during 2008. However all banks are expected to decrease their interest rates in 2009 as the president of Alpha Bank stated in an interview with the Greek national newspaper of Kathimerini on the 16th of November 2008. In any case, even today there are ways of buying a property without needing a large amount via a housing loan.
Yes, construction companies and private individuals selling property are willing to negotiate today - especially the ones that face financial difficulties. Yes, there are construction companies who have announced some deductions of prices. However, in most cases generally in Greece and in Crete the deductions announced refer to specific projects and are not valid across the board. In general analysts of the Greek Real Estate market agree that it is unlikely that prices will increase in 2009, but at the same time they are not likely to decrease. This is another main difference in comparison with what has happened in other countries where prices deductions reached 50% in a period of less than 6 months.
The conclusion one can draw from the above, is that there is demand for properties in Greece and in Crete. This demand may have moved away from holiday homes and may be focusing more on permanent residences but the truth is that this was always the main focus of most buyers in the first place. Currently the main reservation of buyers, especially Greeks, has its roots in the way that the stock market crisis and the world banks issues have been presented by the media, creating a negative psychological barrier. This negativity is not justified especially since Greek banks had a minimum exposure to the subprime related stocks and became even more careful from the time the issues of USA banks became obvious. Most Greek banks have always denied housing loans to individuals for whom their incomes indicated that they may have difficulty in repaying the loan.
One thing is certain: This period can offer great benefit to interested buyers, especially when they have an independent advisor who can guide them through the available properties and negotiate a better deal for them. In the long term whoever buys today will benefit from this purchase in the future. When the world economy improves, housing prices and values will be on the rise once again.
Andreas Batakis has lived in Greece, Ireland and Cyprus, acquiring a Business Administration Degree in Greece, an International Marketing Diploma and a Bachelor of Science in Human Resource Management in Ireland. He is also a member of the UK based Chartered Institute of Personnel and Development and has gained vast experience in the property market.
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