Imagine for one moment you have been planning to buy a property in Greece. Last summer, despite the unfavourable sterling -euro exchange rate, you spent-your holiday on the Athenian Riviera or in Crete and visited a couple of estate agents to sound out the local market But the prices were too high. A villa near the sea cost more than £250,000 in Crete and up to £3.5million outside Athens. You return home empty-handed and wait. As the crisis surrounding Greece’s public finances unfolds, you breathe a sigh of relief that you didn't make an irrational, Retsina-fuelled purchase. Property development companies in Greece are collapsing and insolvency among builders is at a 10-year high. The residential housing market has come to a virtual standstill. You start searching the internet for a villa to rent in August. Surely now is the time to buy your Greek second home?
Not so fast... The Greek second home market has been largely resistant to the global and national economic crisis. "In all the turmoil that has embroiled; Greece in the past couple of months, real estate prices have remained stubbornly high," says Duncan Higgins of Caxton FX. "Since January 2009 prices have come down by just five per cent."
It is too soon for the effect of the public finance crisis on the property market to be felt. "It's going to be hard for some time," says Robert Key of Cluttons in Athens. "But I don't think prices will crash, the only falls we will see now will be for those who have a cashflow problem and have to sell."
Buyers are as nervous about Greece as any other overseas market. Second-home owners looking to sell up this spring will struggle. But, according to George Eliades of Quintessentially Estates in Athens, your property's value will increase in the long run. "After we have been stripped naked in front of the world, we will be more structured and values will go up."
Greece's second-home market was just taking off when the crisis hit in 2007, so there isn't the oversupply of properties as seen in Spain or Bulgaria. Most of the proposed large-scale second-home projects have been shelved. "Developments in Greece are small; usually about three to 10 houses. There are so many blockers and this protects the natural environment," says Key. But this has also protected house values. "Prices haven't dropped dramatically because of a lack of development,:' says Piers Williams of Aylesford.
Likewise, there has not been reduction in the rental prices of villas. According to hoIidaylettings.co.uk, in the past 30 days, Greece has had the 10th most enquiries per property in Europe. According to Williams, people will keep buying in Greece, whatever is happening in the economy. "There's nowhere in the world like the Greek islands and beach-front property is nowhere near as expensive as ill France. The market might be quiet for a couple of years, but you won't be making an unsafe investment."
Let us not forget Britain was similarly volatile situation a year ago. "Greece is effectively six months to a year behind Britain. We went into the crisis later and will come out of it later," says Key. "I'm from Norfolk and my family house has fallen more in value than my home in Athens."
Armed with this knowledge, should you proceed with your plans to buy in Greece? "If you regard it as a five-year investment, you won't go wrong," Key says.
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