Katerina Juzi has given up hope of buying a house that will become HER home. “It seemed unimaginable,” the 29-year-old hairdresser, who recently got married and has a 19-month-old son, told the FT.

Greece’s seven-year property boom has created the same problem for many young people who have little to no access to the property market and are forced to pay rent.

Almost 50% of citizens experience difficulties or cannot pay their rent

The Financial Times article talks about the difficulties young Greeks face when buying their own home and how this is expected to change with a $1.75 billion housing package announced by the Greek government. The package is expected to give thousands of young people access to extremely low interest loans to finance their home purchases. However, according to the British media, it is not clear how the problem with the high cost of housing will be solved.

In particular, as the cost of borrowing in Europe has risen, Greece has become the latest country to offer help to people who want to buy their own home. The package of measures has previously been adopted by Madrid, Warsaw and Ireland.

According to a survey by Eteron, the Institute for Research and Social Change, 47.9% of citizens aged 18 to 44 experience difficulty or cannot pay their rent. For this reason, the issue of housing has become a priority for the government.

government plan

Thus, for 10,000 young people or young couples aged 25 to 39, interest-free or preferential housing loans will be issued, which will be co-financed by the state. This means that the loan at the first stage will have an interest rate of about 1%.

According to Akis Skertzos, Minister of State and the person who designed the program, “In fact, housing costs make up the majority of income. This was not the case before. That’s why we had to create different tools to meet these different needs.” Unfortunately, the percentage of Greeks who spend over 40% of their disposable income on housing costs is above the European average.

However, according to the FT, the OECD recently warned that the package of measures will lead to higher housing costs in the long term.

“Cross-country experience shows that new tax subsidies on mortgage interest rates can push up house prices when new supply is limited. This will lead to reduced access to home ownership,” the Paris-based organization said last month.

Housing prices will remain unaffordable

For his part, Nikos Vettas, CEO of IOBE, said that while the measures are a step in the “right direction”, housing prices will remain unaffordable as long as wages remain low.

The government package also aims to address the housing shortage by using much of the remaining €1.375 billion in funds to refurbish old apartments for students and low-income people.

The government also plans to move civil servants from its 177 offices located in the center of Athens to the suburbs over the next five years, increasing the availability of space in the city center.

Dimitris Melahrinos, chief executive of the largest online real estate platform Spitogatos, told the Financial Times that real estate prices have increased by 30% and rents by 50% over the past seven years. In fact, platforms like Airbnb are also responsible for this growth.

For example, in Koukaki and Plaka, two neighborhoods close to the Acropolis, old buildings have been renovated into boutique hotels, and their former occupants — students and young couples — have now been replaced by tourists.

Source: FT