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Young Greeks vs inflation: The battle against surging prices

The Greek economy grew 7.7% annually in the second quarter, but inflation is reaching a three-decade high at 12%

Like many young Greeks attempting to live within their means, Christina Pappas found a cheaper Athens suburb flat through word of mouth.

At 200 euros a month, she lucked out. Greece’s economy is growing at double the eurozone pace this year thanks to a tourism boom. Still, young people are being priced out of the housing market by the energy crisis, inflation, surging rents, and a lack of tiny apartments.

Pappas, 27, an aspiring actress, says it’s not what young people hoped for amid the debt crisis and austerity.

“The energy situation terrifies me since prices rose so quickly. I’m scared of living alone,” Pappas said.

Rising rents and unaffordable housing are a problem in many industrialised nations. Still, it is particularly acute in Greece because living standards and personal wealth have already been decimated by the 2009 economic crisis and years of austerity.

Pappas’s new 269-square-foot apartment in Neo Psychiko doesn’t include utilities. She relocated last month because the rent on her Athens apartment rose 12.5%, bringing the total monthly spend, including utilities, to 500 euros, making it “impossible to make ends meet” on 650 euros a month.

“My age group is affected. They choose a roommate or live with their parents when you’re 19, you can do that,” she added.

About 83% of 1,007 18-44-year-olds surveyed by the Eteron research tank said cheap housing was their top priority. However, 77% of renters barely make ends meet.

Inflation Bites
The Greek economy grew 7.7% annually in the second quarter, but inflation is reaching a three-decade high at 12%, the highest among eurozone members.

The Greek Statistics Service’s housing cost indicator surged 35.4% year-over-year in September, with electricity prices up 30.5% and heating oil up 65.1%.

The average Greek household’s disposable income has climbed 13% during 2018, claims National Bank’s Nikos Magginas.

Nikos Magginas blames “an unduly depressed market amid the (debt) crisis. Energy, food, and housing price increases have shocked us. But, up to date, it hasn’t severely affected the economy because the government supports low earnings.”

Residential property values in Greece fell 42% during the debt crisis but are now 29% higher than their 2017 low. The rebound raised rents. Brokers think additional variables are worsening the situation.

On the supply side, 45-50 square metre flats have been turned into Airbnb apartments for tourists, while prospective homebuyers face stricter banks. As a result, mortgage loan-to-value ratios have declined from 100% to 70-75%. Banks’ caution supports financial stability but might keep young workers off the property ladder for decades.

Themistocles Bakas, president of E-Real Estate, claimed property ownership in Greece has declined by 2.9 percentage points in the last three years to 73%.

After a decade of economic turmoil and a two-year pandemic, it’s hard for young people to save for a 150,000 euro property. Most Greek cities have seen rents rise, but Athens’ has increased by 40% in four years. Conservatives proposed a 1.74 billion euro assistance scheme last month.

It doubled a student housing stipend to 1,500 euros from 1,000 to 2,000 if they have a roommate. In January, a pilot program will offer low-interest loans for flats built before 2007 and up to 120 square meters. Officials estimate 10,000 25-39-year-old couples to benefit from the 1%-interest loan program.

Stephania Papadopoulou, a 20-year-old waitress who depends on her family for assistance, feels leaving Greece is the only option.

“We left one catastrophe to face another. My future is overseas unless something changes,” she said.

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