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Greece: A new year: A new beginning? - Mike Saunders, Snobby Homes

A new year: A new beginning?

As we come to the end of 2009, with economic shockwaves in the UK at last beginning to rescind, how is the property market holding up in Crete, Greece’s largest overseas property market?

In 2006, flush with easy credit and rocketing property values, UK buyers rushed to buy their dream homes in Crete. The typical exchange rate then was 1.45 euros to the pound. Greek developers felt the ever rising year on year demand would continue ad infinitum. They couldn’t keep pace with demand. And then, in early 2008, sterling began its downward slide, there was a virtual melt down of the banking system, the economy shrunk, the property market crashed and the UK was in its worst recession ever.

Greek banks didn’t follow their UK and US counterparts down the perilous path into sub-prime lending and the Greek government was quick to announce that deposits would be fully protected. Consequently the banking system remained stable, but cautious. In Crete however, locals still grumbled about the price they were getting for olives. The global turmoil seemed a world away - except tourism began to contract and suddenly - almost overnight - the flocks of prospective property buyers migrating from the UK didn‘t arrive. The local concensus, fed on a rich diet of sales, believed things would get better in a month or two. That was in 2008.

For nearly two years property buying Brits - or from anywhere else for that matter - have stayed away. In Crete people have got on with their lives largely unaffected by the troubles. Greece has always been a cash society without individual dependence on loans and credit cards and while some may experience difficulties, a culture of immensely strong family ties mean there are many eggs in a basket to help a family member in financial trouble.

Meanwhile the property sector in Crete has remained dormant - hibernating until buyers return again. There has been little of the fire selling of property as seen in countries such as Spain. Property prices have remained stable - proof that the Greek property market is in fairly good shape as far as a return on investment is concerned. In 2006 you would expect to pay around 120,000€ for a two bedroom detached property in Crete. In 2010, that same type of house is typically priced at around 130,000€.

Banks too have become a little more flexible and purchasers of our properties have recently been granted mortgages up to 80% on bank valuation, subject to status. What’s more, one bank is even offering an 18 month holiday before you pay a penny. That’s a great solution as a bridging loan while you wait to sell your house in the UK. Buy off plan - provided your deposit is legally secured - like the scheme Snobby has in place - and with your property not completed until 2011 - that would mean you wouldn’t have to start paying your mortgage until 2012 or even 2013! How good is that?

We know the dream of buying a property abroad is still burning bright for thousands upon thousands of people in the UK. Given half a chance most would move tomorrow. What with the excesses of government at both national and local level, is it any wonder many feel disenchanted, put upon and yearn for a lifestyle better than they currently enjoy? In life there comes a time when you cannot afford to wait. Anymore. If you don’t make the move now – will you ever? And can you live with that nagging doubt - what if…?

For the majority the passport out is all about selling their house in the UK to release capital. With the UK property market beginning to recover - and likely to get much stronger come Springtime 2010 - there is every indication that 2010 will be a time when the dream of living in the sun becomes a reality for many.

Mike Saunders

Mike is Marketing director of Snobby Homes, www.snobbyhomes.co.uk

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