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Greece: Recession? What recession? - Mike Saunders, Snobby Homes

Recession? What recession?

When the first waves of economic disaster threatened to engulf America and the UK, the impending financial tsunami merely lapped the shores of Greece. Why so? Firstly Greek banks were more prudent than their UK counterparts and did not get drawn into the disastrous US sub-prime lending fiasco. Secondly Greece is still a cash society, with little of the highly geared personal borrowing and credit card indebtedness prevalent in the UK. Consequently 75% loan to value mortgages in Greece are still available for property purchasers from overseas, subject to status.

So have property values in Greece become affected? In general, property has enjoyed year on year growth of 10% and 15% in the years between 2002 and 2007. While sales have been affected following the drastic drop in sterling against the euro and the subsequent collapse in UK property prices, house values in Crete, which accounts for 85% of the Greek overseas property market, has remained surprisingly stable.

Developers became highly geared in their borrowing; to feed what they thought would be an ever expanding market. In mid 2008 like lemmings, sales just dropped off a sheer cliff as the pound fell like a stone against the euro and the UK property market imploded. With the catastrophic collapse of sales in Greece, the majority of developers and estate agents, both large and small, have either gone out of business or are under severe financial pressure.

Despite the UK economy, research just published by the Department of Communities and Local Government reveal that 211,000 people are currently looking to buy properties overseas. ‘Look’ being the operative word. With the demise of property magazines, potential purchasers have been forced to visit web property portals to get their fix on property abroad, as they wait for the UK economy to recover and house prices to rise. Thus, with buyers having become an almost extinct specie over the last year, desperate developers in Greece have been heavily discounting at a loss, just to generate cash to support their borrowings.

Beware. There is no such thing as a free lunch.

Historically the development culture in Greece has been borrow from the bank, get the buyer to pay in stages. However, if a buyer puts a deposit down – or if stage payments are made to fund the build process – this money is always at risk until the contract is complete. And even if a completed house is purchased and you have negotiated a huge discount, you have to ask yourself what are the ramifications of this great deal? Will the builder come back to rectify snagging, will he give me after sales support over the next year or two if any major problems arise? You have to remember, discounts are not a marketing ploy – for weak companies it is a sad fact of survival today - extinction tomorrow. A bargain can prove extremely costly in the long term.

Buying a property abroad is a huge investment in trust.

Fortunately, we are in the enviable position of having no bank borrowings, we are debt free and our take on the market has been to provide purchasers with absolute security and a totally transparent buying process, without any hidden additional charges.

Firstly our prices include all purchase costs, taxes and legal fees - an all-inclusive price so the buyer knows precisely what to budget for. Secondly we legally secure deposits against loss, thirdly there are no stage payments, just the balance paid on completion of contract and fourthly we provide a comprehensive after sale package for complete peace of mind.

We do not discount – we don’t have to. We have a unique product, the specification is amazing, yet build quality and our all-inclusive prices are unbeatable. We have no real competition – and that is the reason why, even in the current climate we are still selling – and still building.

Mike Saunders

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

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