News and Events Latest Greece's Future in the Eurozone
Greece's Future in the Eurozone
HOW IS CRETE'S PROPERTY MARKET FARING IN THE RECESSION?
"Crete and especially the area we operate in (Agios Nikolaos) is
affected by the current Greek recession to far less an extent than other
areas in the country. The local economy depends on high quality tourist
services and agriculture and is not as dependent on the state economics
as other areas. "
HOW WOULD GREECE'S EXIT FROM THE EURO ZONE AFFECT THE MARKET?
"In my opinion it will be good for overseas homeowners. People who have
incomes in Sterling or euro and live in a country that has Drachmas will
enjoy a better lifestyle for less money. Services and goods are bound to
be cheaper and foreign home owners who live and work in our area will
also see an increase in business as a return to the Drachma will affect
tourism positively."
WHAT WOULD HAPPEN TO HOUSE PRICES ON THE ISLAND?
"House prices in our area would not be influenced by this change as
much as they will in the rest of the country. The reason is that
property is owned by people of various nationalities who tend to price
their properties according to the currency and economic situation back
home rather than the situation in the local market. For example,
properties owned by British citizens in our area that have been put on
the market for sale are cheaper than properties owned by Greeks or other
Europeans as the British will benefit from the drop of the pound to the
euro in the last 5 years.
"There will be quite a few bargains on the market nonetheless but this
is already happening as a result of the austerity measures currently
taking place in the country."
YOU MENTION BARGAINS - IF GREECE ADOPTS THE DRACHMA AND THE CURRENCY
WEAKENS, WILL THAT MAKE THE PROPERTY MARKET MORE ATTRACTIVE?
"I believe it will. One of the discouraging factors for potential
overseas home buyers in our area has been the high cost of living -
caused to a high extent by the expensive euro. A return to the Drachma
will be a blow to the quality of living for the majority of Greeks and
for many companies doing business here but for a homeowner or potential
homeowner this could prove a blessing. "
The investigation then led to Mike Saunders, Marketing Director of
Greek building company Snobby Homes. The Property Inspector interrogates
him on the likelihood of Greece's decision to depart from the single
currency.
MIKE, WHAT IS THE CHANCE OF THIS ACTUALLY HAPPENING? COULD GREECE LEAVE
THE EUROZONE?
"Greece leaving the EU may be a possibility, but it is most definitely
NOT a probability - no more than Spain and Italy going back to the
Peseta and Lira. Polls show 77% of Greeks want to remain in the EU and
have endured three years of extreme austerity. However, during all this
time there has been no strategy implemented for growth and consequently
the population has been void of all hope. The recent election was a
wake-up call for the two main parties to get their act together."
WHAT KIND OF EFFECT WOULD GREECE LEAVING THE EURO HAVE UPON FOREIGN
PROPERTY BUYERS?
"The consensus in Europe now seems to be that growth and austerity
measures should be considered in tandem, rather than just total focus on
cuts and the EU are gradually working to that effect. Thus, the question
of what COULD happen is purely scaremongering and does nothing at all to
promote buying property overseas. Where is the sense in putting off
potential purchasers from buying property in Greece or anywhere else in
Europe?"
While speculation may not help market confidence, there is still the
wider financial impact the situation could have upon the continent's
property markets. The Property Inspector quizzes Robin Haynes, Managing
Director of Currency Index, to determine the state of the single
currency.
IF - AND THIS IS A BIG IF - GREECE DOES LEAVE THE EURO, WHAT HAPPENS?
"Who knows? It's an unprecedented situation. There's no way that's been
worked out yet for them to leave, but there's still a month before the
Greece elections and I'm sure the European authorities are putting
contingency plans in place in case an anti-austerity government is
elected, which is when you could possibly be looking at the scenario. "
HOW COULD IT AFFECT OTHER COUNTRIES?
"For the rest of the eurozone, it's hard to know. There is an argument
that says like a pack of animals, if the weakest is killed off the rest
will become stronger. We have seen the euro strengthen a little bit just
after these rumours started to become more realistic, but it depends on
how the markets see the Greek withdrawal and how it could affect the
rest of the currency zone."
THERE ARE ALREADY SIGNS IN THE UK THAT MORTGAGE LENDING IS DOWN AS WELL
AS HOME BUYING, BOTH OF WHICH ARE BEING ATTRIBUTED TO THE LACK OF
CONFIDENCE AS A RESULT OF THE EUROZONE ECONOMIC CLIMATE. HOW MUCH WOULD
GREECE LEAVING THE SINGLE CURRENCY AFFECT THE UK?
"Our financial system is exposed to European debt and European banks,
but again it depends on how well contained it is within Greece. If it
looks like it could spread and Spain may be the new Greece and Portugal
may be the new Spain, it could start to affect our economy more than if
there's a managed exit and the problems in other, weaker countries are
more contained."
COULD IT BE GOOD NEWS FOR PROPERTY BUYERS - OR WOULD IT JUST BE BAD
NEWS FOR SELLERS?
"It could be. You could see very cheap property and holidays and so on
in Greece for buyers in the coming months. If you hold assets there,
they would devalue relative to the pound but would still have a value in
the Greek system. Of course, if you're selling a property that might be
a big concern. There are ways you can hedge your bets a little bit - for
example, you can fix your exchange rates in advance with a currency
broker, so if you have got money or assets in Greece you're thinking of
bringing them back, it may be worth talking to a broker in advance of
the elections to work out your options and protect yourself from any
potential devaluation."
WHAT ABOUT THOSE WHO HAVE MONEY SAVED IN GREEK BANKS?
"The banking system won't be allowed to collapse. Throughout all the
eurozone problems and the financial crisis, no depositor has lost any
money in the banks as yet, so I'm sure that will continue to be the
case. It's also worth knowing that if you're holding money in a British
bank, even euros, they're also covered by the FSA Financial Services
Compensation Scheme so there's no need to panic about money disappearing
in the banking system - it's just a case of making sure you're not
exposed to exchange rates moving against you."
AS THE EURO HAS WEAKENED IN RECENT MONTHS, BRITISH PROPERTY BUYERS HAVE
ALREADY BEEN ABLE TO SAVE SEVERAL PER CENT ON THE PRICE OF A HOUSE IN,
SAY, SPAIN. IF THE SINGLE CURRENCY KEEPS GETTING WEAKER AS THE GREECE
SITUATION PLAYS OUT, DOES ANY OF THIS BENEFIT UK INVESTORS?
"If the euro were to weaken in the coming weeks, you would assume that
would be a temporary movement, but if you were thinking of buying a
property within a year, you could fix an exchange rate based on what the
market does in the next couple of weeks and secure a really good rate
that could make your property cheaper when you do buy it in the coming
months."
We would like to thank the Move Channel for this article. For more information visit: http://www.TheMoveChannel.com