“A plunge in the Greek real estate sector”. That’s what a number of local newspaper headlined over the past days. It was about time, not the action of the newspapers, but the plunge.
Since our arrival here in early 2003 I’ve tried to make sense of the prices of real estate. It just seemed to be so totally detached from reality. At first I thought it was because we were taken advantage of, being foreigners and so. And to an extent that was certainly the case. But I also learned that even locals were subjected to these rising prices (even if they were paying less that what we were asked for), that were completely out of balance with what everybody claims as income.
What’s going on now? In Iraklio sales of new apartments have fallen by 30 to 40 percent and people are turning to second-hand apartments or look for land to build their own house. Moreover this year seizures of apartments by banks have tripled as a large number of buyers are unable to pay their installments. This can be attributed to the wild purchase boom in 2006 that erupted when it became known that by 2007 the government would apply a different set of rules to asses the value of properties for tax reasons, effectively raising the “objective value” by more than 50% in some cases. This assessment is only done at the time of purchase.
To give you an idea of the prices here today: a building plot of 400 square meters in the more popular suburbs of Iraklio (Kipoupolis, Agios Ioannis – where we live, Mastambas, Mesambelies) costs 230.000€ to 250.000€! Putting a small house of 100 square meters on that land will add another 120.000€ to 130.000€. Total cost 350.000€ to 380.000€. You have to understand that there is nothing particularly attractive in these areas that would justify such a premium price. The same dusty and dirty roads, broken pavement, telephone wires strung from one house to the other. It’s just that these are some of the few areas where there is still room to build.
For a new apartment in Iraklio centre you have to count on 3.500 to 4.500€ per square meter, a 10 year old used apartment will cost you 1.500 to 1.800€ per square meter, while a really old apartment (extremely high energy costs) will set you back around 1.000€ per square meter. New or old, I found the quality of all constructions here serious lacking in quality: sloppy finishing, thin walls, amateurish plumbing and electricity.
A real estate advisor was quoted by one of the newspapers as saying — possibly in an urge to end on a positive note — that you can still buy a house with a garden a few kilometers outside of Iraklio for “a mere” 200.000 to 300.000€. I went to see some of these houses. In my own country each of them wouldn’t go for more than 130.000 to 180.000€.
A brand new apartment of 130 square meters in a newly erected complex just opposite our street has an asking price of half a million euros!
To quote Obelix: “Mais ils sont fous, ces Romains!”
For the moment we stick to stuff that is affordable to us and gives us a whole lot more bang for our bucks than a house of our own: the sea, the sky, the sun, the tavernas, the company, the music and the dances.