Cri­sis brings sea change to prop­erty mar­ket as own­er­ship loses ap­peal

Kathimerini English - - Focus - BY NIKOS ROUSSANOGLOU

“What we are ex­pe­ri­enc­ing is the end of the era of home own­er­ship in Greece as house­holds can no longer save to buy prop­erty,” says Nikos Hatz­it­so­lis, chief ex­ec­u­tive at real es­tate firm CB Richard El­lis-Ax­ies, un­der­scor­ing the fun­da­men­tal changes that the cri­sis has trig­gered in the Greek prop­erty mar­ket.

This change, the ex­perts ex­plain, is not just ev­i­dent in the case of those just fly­ing the nest who wouldn’t be in any po­si­tion to own their home any­way un­less it was given to them by their fam­ily, but also ex­ist­ing home­own­ers who are opt­ing to leave their prop­erty and rent it out or sell it.

“Around 70 per­cent of home­own­ers are be­com­ing renters be­cause they choose to sell their prop­erty to pay off debts such as mort­gages, late taxes or credit card debt,” says Lef­teris Po­tami­anos, vice pres­i­dent of the Athens-At­tica Es­tate Agents As­so­ci­a­tion. “If any money is left over from the trans­ac­tion, it is not rein­vested in another prop­erty, as was the case in the past, but used to rent another home. Ba­si­cally, the dream of own­er­ship that drove past gen­er­a­tions has come to an end.”

A sig­nif­i­cant per­cent­age of home­own­ers choos­ing to rent out their home and lease a dif­fer­ent prop­erty for them­selves also con­sists of young peo­ple who see their ac­com­mo­da­tion re­quire­ments in­creas­ing, due to the birth of a child for ex­am­ple, or want to live in an area with bet­ter schools or se­cu­rity.

“We are see­ing more and more such cases in the prop­erty mar­ket,” says Po­tami­anos. “Given that sales prices are very low and it is hard to find a buyer, many own­ers pre­fer to rent out their prop­erty and then rent another for them­selves, as get­ting bank fund­ing for a pur­chase is in­cred­i­bly dif­fi­cult. Some even move around to see which area suits them best. Rent­ing has this flex­i­bil­ity, al­low­ing you to re­lo­cate if you’re not happy.”

For the over­whelm­ing ma­jor­ity, how­ever, rent­ing is the only op­tion, as buy­ing is seen as bring­ing no ad­van­tages what­so­ever any­more.

“Even from a purely eco­nomic per­spec­tive, it’s not worth own­ing a home to­day. In con­trast, peo­ple who rent avoid all the ad­di­tional tax costs and are not ex­posed to the in­sta­bil­ity of the tax frame­work for real es­tate as­sets, which has be­come a tool of pol­i­tics and results in no tax­payer know­ing what to­mor­row will bring,” ex­plains Hatz­it­so­lis. “Pre­vi­ous gen­er­a­tions be­lieved that buy­ing houses was a form of in­vest­ment. This is no longer the case, as we’re see­ing a com­pletely dif­fer­ent men­tal­ity in younger peo­ple.”

The ex­pert also draws at­ten­tion to the cases of peo­ple who are stuck with their prop­er­ties.

“I know an owner who in­her­ited a house in [the up­scale Athe­nian sub­urb of] Ekali and has to pay 80,000 eu­ros a year in prop­erty tax,” he re­counts. “At best, the house could fetch 50,000 eu­ros a year in rent, which means that this man has to cover losses of 30,000 eu­ros ev­ery year, some­thing that is a com­plete dead end.”

This owner has lit­tle choice but to sell, says Hatz­it­so­lis, adding that such cases also ex­plain why an in­creas­ing num­ber of peo­ple are re­fus­ing their in­her­i­tances. gen­er­a­tions be­lieved that buy­ing houses was a form of in­vest­ment. This is no longer the case, as we’re see­ing a com­pletely dif­fer­ent men­tal­ity in younger peo­ple,’ says Nikos Hatz­it­so­lis, chief ex­ec­u­tive at real es­tate firm CB Richard El­lis-Ax­ies.

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