With Greece’s tourism industry making a strong post-pandemic recovery, Athens has increased its share in the sector, but this has also led to a rise in housing costs as central district apartments are converted into short-term rentals and purchased by foreigners, causing a decline in the house ownership rate and a high housing cost overburden rate.
The house ownership rate in Athens and in Greece by large, which, not so long ago, was among the highest in Europe with over 70%, is on the decline now, and the housing cost overburden rate is over 32%, one of the highest in Europe.
“The situation started to turn bleak for working and low-middle classes in Athens with the economic crisis in 2009 when the banks started massive foreclosures,” said Dimitris Pettas, a senior expert on urban sociology at the Berlin Technical University.
With the crisis, declining housing prices combined with the golden visa program, which aimed to attract capital to the country in return for a long-term residence permit, led to extensive penetration of the real estate market in Greece, mostly of Athens and other touristic locations including Crete and Aegean islands, by the wealthy foreigners from China, the US, Israel, among others, he explained.
On top of that, Pettas continued, came the pandemic, which deeply struck the purchasing power of Greek working and middle classes when many businesses were shut. On the other hand, many Westerners from the IT and service sectors, also called digital nomads, moved to Greece where they could work from home for companies located in the West.
“Against this backdrop, many central neighborhoods in Athens such as Victoria, Kipseli, Patision, and Petralona, home to migrants and local working-class people, are being taken over by foreigners who are willing and capable of paying more for everything, not only for rents,” he pointed out.
Pettas argued that the increasing presence of foreigners, who obviously have a higher income than locals, also led to higher prices in almost every sector, from local groceries to restaurants and other services, and consequently put further pressure on the locals’ declining purchasing power.
According to Pettas, the housing crisis in Athens is spilling over to some other cities across the country.
Impeded public services
The rise in rents and prices of houses in Athens set a precedent for house owners in other cities and they started demanding higher rents or prices, he explained.
This situation in the housing market also caused serious problems in public services, Pettas added.
“When public servants, including much-needed doctors and teachers, are posted to tourist locations such as islands, they can’t find affordable housing. As a result, they either quit jobs or ask for their transfer to somewhere else in the country.”
He also pointed out that the government’s inaction in regulating the real estate market through measures such as imposing a price cap on rents or producing social housing is further deepening the crisis.
Pettas warned that Athens risks losing its attractiveness in the long term if the current trends continue unchecked.
Displacement of the locals would gradually erode the identity of the city which keeps drawing foreigners, he said. (AA)