Athens, Greece – Shortly after the conservative New Democracy party came to power in Greece in 2019, IT specialist Nikos Larisis left his job in the Netherlands and was repatriated to the Mediterranean country for a salary worth a third of 9,000 euros ($9,500) he earned per month. .
It appears to vindicate New Democracy’s pledge to bring home an estimated half-million young, educated workers who fled the country’s economic depression from 2010 to 2018.
Conservatives returned to power for a second term in June with little evidence that many Greeks have followed in Larisis’ footsteps.
Even he and his fiancée, Eleftheria Tsiartsiani, a public primary school teacher, felt stuck and considered going abroad.
They were paying a quarter of their joint income in rent and couldn’t borrow enough money to buy the two-bedroom house they dreamed of raising their family in.
The government then announced a 1.8 billion euro ($1.9 billion) program to help young couples buy their first home.
“Eleftheria told me: ‘Niko, we can buy a house. We can reconsider. We don’t need to take risks and leave,” Larisis told Al Jazeera.
But after examining the government’s offer, called My Home, the couple became disillusioned.
“It was not well designed at all. It dragged people down and destroyed their dreams,” Larisis said.
Larisis and Tsiartsiani could borrow 90,000 euros ($96,000) under the program, but that did not guarantee them an attractive family home in a market skewed toward foreign buyers spending 250,000 euros ($270,000) for a Golden Visa, which at the time offered them five years of insurance. legal residence and path to citizenship. The spending requirements for the Golden Visa have since been changed to double this amount.
“I will let the State keep its 90,000 euros,” Tsiartsiani said. “There is no point buying a small, old, dark and damp apartment that does not meet our needs, that smells of mold in a poorly maintained building and being up to my neck in debt for the rest of my life .”
Additionally, Tsiartsiani said, “We saw many sales listings that stated, ‘The property is not for sale through the My Home program.’
The sellers told the couple they didn’t believe they could get their money from the government and only wanted cash.
The experience convinced the couple that Greek law was tilted in favor of non-Greeks.
My Home did not allow beneficiaries to rent their property and limited them to purchasing property near their place of work. The Golden Visa program has no such limitations.
“There’s a big party. Foreign capital is trying to take advantage of the situation here and the laws are helping them. Golden Visas allow people to come and buy a house here… while others are saddled with loans they cannot repay,” Larisis said.
The tourism problem
Greece’s great economic success under New Democracy has been tourism, which has exploded since the COVID-19 pandemic, attracting three times the Greek population each year. It generated a near-record turnover of 18 billion euros ($19 billion) last year.
Tourism helps bring in the foreign currency with which Greece manages its loans, and it has helped existing homeowners. Around 105,000 properties are now offered for short-term rental through Airbnb.
But it also exacerbated a demographic problem. By restoring property values lost during the Depression, it put first homes out of reach of young people.
“We came out of the pandemic with a little extra money, … which was mainly focused on housing,” said real estate consultant Stelios Bouras, who runs the real estate information site Greek Guru. “Working from home, people wanted bigger homes. … It also coincided with a massive increase in the number of Greek homes allocated to foreign buyers.”
Average Greek property prices rose 12 percent last year and are expected to rise another 14 percent this year, according to Bank of Greece data.
This has spurred investment in real estate, but almost all of this investment is geared toward the high end of the market.
Ellinikon is a prime example: a 600-hectare (1,500-acre) urban redevelopment of what was once Athens Airport, nestled in the city’s southern suburbs.
Its first project, the Marina Tower, which is currently rising along the coast of Attica, will be the tallest building in Greece when completed.
It will also be one of the most expensive. Each floor was sold at a reputed price of 16,000 euros ($17,000) per square meter (nearly 11 square feet).
Ellnikon’s owners said real estate would cost an average of 10,000 euros ($10,600) per square meter, but that remains well beyond the capabilities of most Greeks.
“The market growth that everyone is talking about at the moment in terms of investment is in foreign high-net-worth individuals and higher incomes in Greece,” Bouras told Al Jazeera.
“For the vast majority, there is no development. And if you look at government policy to increase supply levels, there is almost no movement,” he added.
Ellinikon’s CEO makes no apologies for the fact that 30 percent of the 1.2 billion euros ($1.27 billion) in real estate he has already sold has gone to Syrians, Egyptians, Emiratis, other Europeans and Americans.
Odysseas Athanasiou argued that by attracting foreign buyers, The Ellinikon is opening up Greece’s stagnant economy.
“For many, many decades, Greece has been redistributing the pie of wealth, or poverty, if you prefer, and now, with new revenues coming from all over the world, we are generating new money. The new money will be distributed more or less to everyone,” Athanasiou told Al Jazeera.
According to Athanasiou, among other benefits: The Ellnikon will create 80,000 permanent jobs.
A shrinking and aging population
Greek society is facing a potentially existential problem, and real estate prices are only making the situation worse.
Its population has been decreasing since the beginning of the century. This decline accelerated after its eurozone partners imposed austerity policies in exchange for emergency loans in 2010.
Greece’s birth rate fell by 30 percent between 2011 and 2021 to less than 84,000 per year, sliding further below the death rate, according to the Hellenic Statistics Service.
The cumulative population loss over this decade was 329,451, roughly in line with the 2021 census recording a population decline of 3.1%.
Given that each Greek paid an average of 5,758 euros ($6,125) in taxes and social security contributions last year, this drop represents a loss of almost 2 billion euros ($2.13 billion) per year of public revenue – around 3.2% – over the long term.
Analysts estimate that by mid-century, Greece could have difficulty generating the current level of government revenue – 60 billion euros last year ($64 billion) – or manning its armed forces.
Population decline is particularly damaging in combination with aging. Only 4.2 million Greeks work, which supports a total population of 10.5 million, including three million retirees.
New Democracy launched Greece’s first funded social security scheme for those under 25, but for now the majority of retirees rely on current contributions.
New Democracy also launched a series of measures to combat demographic decline and may have had some success.
He kept promises to cut income taxes, sales taxes and Social Security taxes and proposed paternity leave and extended child care.
He offered a cash allowance of 2,000 euros ($2,200) per child, increased the tax cut for families by 1,000 euros ($1,065) and now promises to raise the average wage from 1,170 to 1,500 euros ($1,245 to $1,600).
Signs of improvement
Greece may have started to see a slight flutter of improvement. Live births increased by 1.2 percent in 2020 and by 0.7 percent in 2021.
But My Home, its biggest direct measure aimed at helping young couples move forward with their lives, has met with mixed results.
The program was supposed to accommodate 137,000 young people, but only 4,500 applications received state approval and not all received bank approval.
“All programs are evaluated and corrected,” Maria Syrregela, deputy minister of labor in the previous government, told Al Jazeera. “My Home was the start of an ongoing public program to provide housing. »
Syrregela was in charge of demographic policy, and perhaps his greatest achievement was convincing the opposition to sign a multi-year action plan.
“Population policy is not about doing something today and getting tangible results tomorrow,” she said.
“If you start a program now, you could see results in 10 years. That’s why governments tend not to worry about it.”