Property in Greece Getting Cheaper

The cost of buying your dream Greek home could fall over the next couple of years.  That’s the conclusion of a report by Fitch Ratings which says that the cost of buying homes in Greece is expected to fall by up to 15 per cent over the next two years.

Rises in repossessions as a growing number of people fall into arrears on their mortgage payments is expected to result in lower property prices.

Rise in repossessions means cheaper property prices

The Fitch report states that: “It seems that a rising number of borrowers delaying payment of their mortgage loans will end up in a higher number of non-performing loans.”

An increase in the number of borrowers defaulting on loans is expected as part of the Greek government’s strategy to clear its £100 billion debt to the European Union and the International Monetary Fund after a bailout in 2010.  Large scale public sector job cuts are one part of the Government’s cost-saving plans, resulting in increased unemployment and a number of people being unable to meet their mortgage commitments.

Interest rate rises and spending cuts may lead to cheaper property in Greece

Even though Greece has struggled with huge economic problems over the last few years, the average property price in Greece has only fallen by 4.3 per cent since the peak in 2008.  This has mainly been as a result of low interest rates which have kept the cost of mortgages down.

However, the prospect of interest rate rises in 2011 will make mortgage loans more expensive for lots of Greek homeowners.  With public sector cuts to come, many people will find themselves struggling to pay their mortgages and having to sell their property to avoid arrears and repossession. 

This process is likely to cause property prices to fall, as identified in the Fitch report.  And, with property prices falling, it could be the perfect time to snap up a Greek property bargain.