The Greek Real estate sector is still on a path of recovery, Bank of America (BofA) explains in a report on Greece and Greek banks. The Greek real estate market went through a long and hard period of pressure in the period 2008-2017 with falling prices and an increase in real estate taxes.
Property ownership remains high in Greece, the bank points out, as about 75% of people are homeowners, something which resulted in a severe negative financial impact. Housing prices gradually began to bounce back, but the onset of the pandemic led to a slowdown in growth, the report stressed.
The pandemic also led to a decline in foreign direct investment (FDI), which, however, began to recover after the end of the first quarter of 2020. The Golden Visa programme offers citizens of third countries a residence permit in Greece in exchange for a real estate investment of 250 thousand euros. The plan was also affected by the lockout measures, the bank explains.
BofA attaches great importance to the new public real estate agency (The Hellenic Public Properties Company (HPPC)) that will buy up properties from bankrupt retailers with out-of-court settlements and lease them back to them (12-year lease) while providing them with the opportunity to repurchase at market prices. Government intervention may alleviate the pressure on prices of the free market on the stock of insolvent borrowers by increasing the supply of housing.
The new state initiative has been received positively by the market, as more than 20,000 debtors have already joined the mechanism. The data is accumulated automatically, and through a special algorithm, a debt restructuring proposal is created. With the transfer of the property to the public body, the debt will be fully settled and the debtor will be able to make a fresh, debt-free start.
As this new public real estate agency is not yet fully operational, there will be a ‘temporary protection regime’ for those whose main house is mortgaged until it becomes functional. The scheme provides for a state subsidy for part of the monthly installment of the debt. The amount is estimated to be approximately equal to the amount of the current housing allowance (70-210 euros) and will be valid from June 2021 to March 2022. Under the new law (4738/2020), the main home is also protected by the payment of a subsidy on the monthly regulated debt for five years.
As BofA explains, bank administrations are leading a recovery in mortgages, but this will most likely come after the renewal of the growth of business loans that will be stimulated by investment.
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