# Young Greeks priced out as inflation, rents soar Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-26 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Rising Rents and Affordability Crisis for Young Greeks in Athens Meta Description: Discover how soaring rents, high energy costs and inflation are pricing young people out of the Greek property market, impacting living standards and household URL: https://financedigest.com/young-greeks-priced-out-as-inflation-rents-soarhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-10-26t101753z3lynxmpei9p05prtroptp4greece-economy-housing-rents-1736814970556-compressed.jpg) By George Georgiopoulos and Lefteris Papadimas ATHENS (Reuters) – Like many [young](https://www.financedigest.com/why-technology-will-free-britains-young-workers-from-presenteeism-in-the-workplace.html) Greeks trying to live within their means, Christina Pappas had to look for a cheaper flat in an Athens suburb after her rent went up and was relieved to find one through word of mouth. At 200 euros ($197.20) per month, she got lucky. While Greece’s economy is growing at nearly twice the euro zone rate this year thanks to a robust rebound in tourism, [young](https://www.financedigest.com/why-technology-will-free-britains-young-workers-from-presenteeism-in-the-workplace.html) people are increasingly being [priced out of the property](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") market due to the energy crisis and inflation, soaring rents and a scarce supply of small flats. Pappas, 27, an aspiring actress, says it is not the dividend [young](https://www.financedigest.com/why-technology-will-free-britains-young-workers-from-presenteeism-in-the-workplace.html) [people hoped for after a ravaging debt](https://www.financedigest.com/5-common-ways-people-end-up-in-debt-without-realising.html "5 Common Ways People End Up In Debt Without Realising") crisis and a decade of austerity. The energy crisis scares me a lot, that in such a small amount of time we would have such an [increase in prices](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase"). I am frightened by the idea of how I will [manage and continue](https://www.financedigest.com/uk-to-manage-water-resources-carefully-as-drought-continues.html "UK to manage water resources carefully as drought continues") to live alone,” Pappas said. [Rising rents and unaffordability of housing](https://www.financedigest.com/uk-housing-market-may-face-perfect-storm-as-mortgage-rates-rise-house-prices-drop.html "UK housing market may face perfect storm as mortgage rates rise, house prices drop") is a problem across many industrialised economies, but in Greece it is particularly acute as living standards and household wealth have already been crippled by the debt crisis that began in 2009 and the years of austerity that followed. The rent on Pappas’s new 25 square metre (269 sq. ft) flat in the suburb of Neo Psychiko does not include utilities. She moved last month after the rent on her flat in the Kaisariani district of Athens went up 12.5%, [pushing the total monthly](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") outlay including utilities to 500 euros, making it “hard to make ends meet when one’s pay is 650 euros a month. Many [people in my age](https://www.financedigest.com/esbconnect-finalises-management-buyout-and-welcomes-in-a-new-age-of-people-based-marketing.html "esbconnect finalises management buyout and welcomes in a new age of people-based marketing") group face the same problem. They [either opt for a roommate or they continue living with their parents,”](https://www.financedigest.com/86-of-parents-believe-there-should-be-either-a-total-ban-or-heavily-restricted-use-of-smartphones-in-schools.html "86% of parents believe there should be either a total ban or heavily restricted use of smartphones in schools") she said. “You can do that when you are 19 but not in later years.” A [poll by the Athens-based Eteron think tank this year](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") showed that for 83% of 1,007 respondents aged 18-44, affordable housing was their top concern. [Nearly half](https://www.financedigest.com/nearly-half-of-parents-still-give-pocket-money-to-their-adult-children.html "Nearly half of parents still give pocket money to their adult children") said they faced difficulties or were unable to pay their rent, with 77% barely making ends meet. [INFLATION BITES](https://www.financedigest.com/analysis-east-europes-party-is-over-as-double-digit-inflation-bites.html "Analysis-East Europe’s party is over as double-digit inflation bites") While the Greek [economy has shown resilience](https://www.financedigest.com/stocks-dollar-gain-on-resilient-u-s-economy.html "Stocks, dollar gain on resilient U.S. economy"), growing at an annual clip of 7.7% in the second quarter, inflation is near a three-decade peak at 12%, one of the highest among the 19 countries sharing the euro. The Greek Statistics Service’s cost of housing indicator, which reflects rents and mortgage costs, jumped 35.4% year-on-year in September with electricity [prices up 30.5% and heating oil](https://www.financedigest.com/oil-ticks-up-as-u-s-inflation-cools-but-prices-set-for-monthly-drop.html "Oil ticks up as U.S. inflation cools, but prices set for monthly drop") up 65.1%. That is squeezing disposable income, which for the average Greek household has risen by 13% since 2018, says Nikos Magginas, chief economist at [National Bank](https://www.financedigest.com/swiss-national-bank-says-inflation-battle-not-yet-won.html "Swiss National Bank says inflation battle not yet won"). He attributes the [surge in rents mainly to “an overly depressed market](https://www.financedigest.com/sodium-formate-market-set-to-surge-significantly-during-2019-2027.html "Sodium Formate Market Set to Surge Significantly During 2019-2027 ") during the (debt) crisis. Now we have a shock from the combined [price rises](https://www.financedigest.com/oil-prices-rise-on-u-s-drawdown-chinese-fears-weigh.html "Oil prices rise on U.S. drawdown, Chinese fears weigh") in energy, foods and the cost of housing. Up to now it is not having serious effects on the economy as the government supports weak incomes, but there are concerns should this continue [next year,”](https://www.financedigest.com/cepsa-to-nearly-double-investments-over-next-3-years-as-profit-soars.html "Cepsa to nearly double investments over next 3 years as profit soars") he said. Residential property prices in Greece [plunged 42% during the debt crisis but are now more than 29% higher than their low](https://www.financedigest.com/samsungs-quarterly-profit-plunges-to-8-year-low-on-demand-slump.html "Samsung’s quarterly profit plunges to 8-year low on demand slump") in 2017, according to the Bank of Greece. The rebound has also pulled rents higher. Additional factors at play are exacerbating the problem, [real estate](https://www.financedigest.com/the-north-heads-south-to-mipim-en-masse-to-corner-new-real-estate-business-opportunities.html "The North heads South to MIPIM en masse to corner new real estate business opportunities") brokers say. On the supply side, a large chunk of small 45-50 square metre flats have been turned into Airbnb apartments for tourists, while prospective home buyers [face the scrutiny of much more stringent banks](https://www.financedigest.com/analysis-u-s-banks-face-trillion-dollar-reverse-repo-headache.html "Analysis: U.S. banks face trillion-dollar reverse repo headache"). Loan-to-values on mortgages have dropped to 70-75%, from more than 100% before the debt crisis. [Banks’ caution underpins financial stability but could also keep young working](https://www.financedigest.com/working-with-banks-essential-tips-for-fintechstartups.html "Working with banks – essential tips for fintechstartups") people off the property ladder for decades. “The situation is tough … we will see many returning to their childhood rooms,” said Themistocles Bakas, president of E-Real Estate, adding that [home ownership in Greece has dropped by 2.9 percentage points in the last three years](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain") to about 73%. After a decade of economic crisis and a two-year pandemic it is hard for a [young person](https://www.financedigest.com/to-be-a-young-person-and-own-your-own-home-should-be-a-dream-that-everyone-has-the-right-to-fulfil.html "“To be a young person and own your own home should be a dream that everyone has the right to fulfil.”") to have saved 45,000-60,000 euros for a down payment on a 150,000 euro apartment, he said. Most Greek [cities have seen rents](https://www.financedigest.com/why-are-there-so-few-apartments-to-rent-in-liverpool-city-centre.html "Why are there so few apartments to rent in Liverpool city centre?") rise but central Athens has seen the biggest spike, by up to 40% in the last four years. Aware of the squeeze, the country’s conservative government last month [launched a 1.74 billion](https://www.financedigest.com/novartis-launches-new-11-billion-share-buyback.html "Novartis launches new billion share buyback") euro relief programme. It raised an annual [housing subsidy for students](https://www.financedigest.com/why-student-housing-has-been-propelled-into-the-mainstream.html "Why Student Housing has Been Propelled into the Mainstream") to 1,500 euros from 1,000, and to 2,000 if they opt for a roommate. Also, a pilot programme of low [interest rate](https://www.financedigest.com/ecb-raises-interest-rates-again-cuts-bank-subsidies.html "ECB raises interest rates again, cuts bank subsidies") loans to buy apartments built before 2007 and up to 120 square metres will start in January. Officials expect about 10,000 young couples aged 25-39 will benefit from the programme [offering 1% interest on loans up to 150,000 euros](https://www.financedigest.com/big-fall-in-euro-zone-inflation-offers-little-help-for-ecb.html "Big fall in euro zone inflation offers little help for ECB"). But Stephania Papadopoulou, a 20-year old [student who earns 35 euros a day as a waitress and relies on her family for financial](https://www.financedigest.com/the-hidden-financial-woes-of-international-students-heading-for-the-uk.html "The Hidden Financial Woes of International Students Heading for the UK") support, says leaving the country is the only way out. “We emerged from a crisis to enter another, tougher one,” she told Reuters. “Unless something changes, I certainly see my future abroad.” (Writing by George Georgiopoulos, additional reporting by Renee Maltezou; Editing by Susan Fenton) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---