In theory, Greek property prices ought to plummet thanks to the austerity measures brought in to erode the country's debt mountain – higher taxes, lower wages, smaller pensions and fewer jobs mean less money to spend on flats and houses. But this is Greece we are talking about, so it is not that simple. The Greek housing market may do relatively well over the next few years, because it may be saved by a white knight in the form of the country's "black economy".
The Greek government says the black economy accounts for one quarter of the nation's GDP. You can be sure persons employed in this sector pay little tax and rarely cut their own wages, so they may have the means to prop up Greek property values. Indeed, they may be the only Greeks able to afford a home over the next year or two.... or three.
So who are these people that beaver away so productively in the black economy? According to the government, which has included their output in official GDP figures since 2006 to make the nation's budget deficit seem smaller, they include prostitutes, money launderers and cigarette smugglers. Estate agents won't care one jot.
http://globalpropertynews.blogspot.com
For anyone reading "Greek Property Crash" I sincerely apologise. OK, I wrote it half tongue-in-cheek, but the reality is that the country's black economy has not come to the rescue of the Greek housing market in even the smallest way - how could it! The past two years since that post was written have been disasterous for Greece. The housing market has plummeted - no amout of money laundering or cash-in-hand jobs can counteract the affect of scorched earth economic policies coming from Berlin. A new post on Greece shall follow shortly giving an updated view on the situation. Stay tuned.
ReplyDeleteFor an update, please read my blog posted today, 15th May 2012, and labeled in the "Europe" section - Greece: Impact of Political Crisis on its Property Market.
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