Month: January 2023

The Greek financial crisis started in 2010 and bottomed out in 2015, with two elections and a referendum. Since 2015 and until today, Greece has recovered quite a bit, the economy has improved a lot and the economy has grown strongly. In addition to the economy as a whole, the real estate sector has also recovered significantly, with increasing demand from Greeks and even foreigners for apartments in cities and holiday homes or building projects on popular islands.

According to the Hellenic Statistical Service, in 2015 13,350 building permits were issued, in 2020 18,768 (a 40% increase in five years), and for 2022 the number of building permits is approaching 24,200. (Data for November and December 2022 are still missing). Thus, an 80% increase in the number of building permits for private projects in 7 years shows how strongly the real estate sector has supported the recovery of the Greek economy.

All of us in the construction industry were used to estimating construction projects with fixed prices. We had fixed prices in our minds and in our notes and during our discussions with clients we were able to come up with a very accurate estimate of construction costs from the beginning. It was also common for construction contracts not to include an inflation clause because it was not considered necessary. There was almost no volatility in the prices of building materials and if there was a change in the price of material, suppliers were able to lock in prices for current projects and only apply the new prices to future projects. From the beginning of 2021, steel and timber started to become more expensive and by the end of 2021, all suppliers continuously announced new higher prices. The year 2022 was a year where many expected prices to decrease, but then the war in Ukraine started and energy gave the last but very strong pressure on all prices. From 2020, the year of the pandemic, when demand was at its lowest point, to the beginning of 2023, total construction costs have increased by 20-25%. In 2021 the price increases were due to increases in material prices, but in 2022 labor costs also increased by 10% because of global inflation.

What is very important for the real estate sector in Crete is the fact that Crete is still very attractive compared to other Mediterranean holiday places, both in terms of construction costs and property prices.

Since the beginning of 2022, the US Federal Reserve has raised interest rates by around 4% and the European Central Bank by 2.5%. This means that mortgage rates have also risen, and property markets are under pressure for the first time in many years since the 2008 global financial crisis.

Mortgage rates in a country are linked to bond rates. Thus, during the golden age of zero interest rates in Europe and the Western world in general, mortgage rates were very low. Because of the zero interest rates, the real estate sector in Western countries has grown very strongly, and, in the opinion of many analysts, led to a bubble.

In contrast, this has not happened in Greece. In the period 2010-2015, when the real estate sector in Western countries was strongly upwardly trending, the prices in Greece had fallen by about 30% and banks were hardly lending for real estate.

Since 2015, the Greek real estate sector recovered, but without the help of loans, but with own capital. During the zero-interest rate period, mortgage rates from greek banks were comparatively very high, approaching 4% for apartments and detached houses.

After 2015 and even today, Greeks and foreigners who want to invest in Greece must do so with 100% equity for the investment to make sense. This disadvantaged position in which the Greek real estate market finds itself provides room for a realistic real estate price valuation compared to the rest of the Western real estate markets, as the highly leveraged markets are on the verge of bursting the bubble…A bubble that the Greek real estate market has never reached, and real estate prices remain at an affordable, realistic level.

The recovery from the pandemic

In the year 2022 , after 2 years of strict quarantine and total isolation of the world, the reaction of man and his thirst for a return to normal life rhythms, was self-evident.

Activity seemed to return to a very intense pace

and this was very much reflected in the statistics of tourist bookings,

which surpassed the previous Pick of the best previous best tourist year for Greece, that of 2019.

The war in Ukraine

It followed the shock of an unexpected war in the heart of Europe that put in doubt the apparent resumption of Europe’s economy to pre-covid levels, centered on the energy problem and the threat of the fuel supply shortages, especially for the industrialized countries of the north.

This has resulted in the psychological freeze of the world, more than the real, as it turns out, but with consequences for the cost of living of European citizens and elsewhere.

Life in Crete

We who have the good fortune to live in Crete, one of the southernmost and most sunny places in Europe, we have once again found out how lucky we are to have such to live in this beautiful place, with an average of 310 sunny days a year, which especially in this winter, when we need it so much more has so far given us the sunniest days than any previous one, with the direct consequence of minimal energy for heating in the winter months.  At the same time the fact that the island can provide produce to a high degree of self-sufficiency many of the necessities for daily life table products. as olive oil, vegetables, wild greens, etc., of excellent quality and at relatively affordable prices, avoiding the cost and wear and tear of transport, allows us to look to the future with greater optimism.

These advantages, in addition to us the local residents of the island and our quality of life, are shared by the thousands of northern Europeans who have either bought or built on the island and have chosen and continue to choose Crete as their place of living, and continue to do so, not only during the summer months as common tourists, but as permanent residents of the island. island, enjoying the friendship, hospitality, zero crime and the warmth of our island, together with its local inhabitants.

How the property market in Crete is affected

Real estate in Crete is still affordable compared to other markets in southern Europe and offers unparalleled advantages in terms of quality and value for money and quality of life.

For all these reasons, after a numbing of their market the last few months of last year, interest from other Europeans and non-Europeans alike to buy a house in Crete, seems to be reviving at a strong pace.

There is still a supply of secondhand houses in good condition, needing minor or major repairs in the 100.000 – 200.000 € zone, but also in larger categories, in the 200.000 – 1.000.000 € zone. The values of the plots vary, depending on their location in relation to the distance from the sea and residential – tourist centers, both in the north and in the south Crete, as well as by their building rate, starting from 40.000 €, up to 100.000 , out of town and at higher prices in and around the cities and around the coastal zone, which encourages many interested parties to design and build their homes to modern, high standards quality and at relatively affordable prices compared to other parts of Europe. All these elements make Crete one of the most attractive places on the earth to live in, in our times.