PASOK, the Greek Economy and Greek Property Investment

As the world economy struggles along, and economists frantically attempt to uncover the notorious ‘Green Shoots of Recovery,’ the newly installed PASOK government has little time to waste. Prime Minister, George Papandreou, has named his cabinet and proposed a 100 day plan to boost the economy. Lowering some of the barriers to Greek Property investment is a keystone of this call to arms, a promise that may lure back some of the investors currently looking at Eastern Europe and Turkey.

Like the rest of the world, Greece is still in a little trouble economically, but the financial state of this small nation could be much worse. As the British look to buy property abroad again, the state of the Greek economy and the exchange rate are crucial to persuading them to choose Greece.

Surveying the Damage

The last government left an economy in a reasonable state, albeit with concerns about the size of the national debt, currently running at 10% of GDP. However, the common consensus is that the economy survived despite the outgoing administration, rather than through their policies. Ultimately, the high level of outright property ownership in Greece, the conservative nature of the banking system, and membership of the Eurozone ensured that the country did not sink into deep recession.

The Bank of Greece Governor, George Provopoulos, speaking at the annual meeting of the International Monetary Fund, pointed out that the introverted nature of Greek economy protected the country from a deep recession. He also warned that Greek politicians that this tendency towards looking inwards could be the biggest barrier to recovery.

By this, he means that the new government must rid the country of some of the inertia and dogmatic bureaucracy that consistently stifle inward investment. Fiscal reform, and a 3bn Euro stimulus plan, must be matched by genuine structural reforms, or the chance to restart growth will be lost.

PASOK - Attracting Greek Property Investment?

Potential for Greek Property Investment

If the new administration delivers upon its promise to ease the property buying process and reduce the Greek annual property taxes, Greece could become a very good preposition for property investment. However, one major obstacle is the strong Euro, a factor deterring British investors.

Economists believe that the size of the UK economy, and its close ties with the US crisis, created an inertia and lag, leaving it in the doldrums whilst the Eurozone turned the corner.

According to most predictions, the pound should recover over the next few months, so any growth in Greek property investment from the UK will not take root until next year. The European Central Bank President, Jean-Claude Trichet, has signalled his attention to address the strength of the Euro, which will be a welcome relief to the beleaguered Eurozone exporters.

For British buyers planning to spend hundreds of thousands of Euros on Greek property investment, we advise waiting until the spring. If the Sterling strengthens against the Euro, the savings will be huge. In addition, property prices are stagnant in Greece, so there is little pressure to buy immediately.

Waiting a few months will give a better picture of whether Papandreou and his PASOK government genuinely want to encourage Greek property investment. If they are, investors will save a hefty sum on taxes and will be able to fully exploit a buyers market.

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