The investment value of property in Crete

Not too many people are buying property in Crete as an investment. But if you ever decide to sell your house in Crete it could become an important issue. So what have property values done and what is going to happen in the next few years?

A look at the last twenty years

Integration in the European Union in the 1990s made owning property in Greece a relatively simple matter for EU nationals and they started buying. At the beginning it was a few individuals here and there who then passed on the word that Crete was a good place to live and more and more came, creating a real property boom in some areas. Not surprisingly prices  increased by a healthy percentage...maybe 20% a year on average which made property a very good investment indeed.
The demand for property was not fueled by foreigners only: until about 20 years ago only few Cretans had cars (they were too expensive). Then some taxes were lifted, inflation in Greece decreased making bank loans and cheap credit possible and within the next 10 years car ownership became almost universal.  With cars, commuting became possible and more and more inhabitants of the cities started moving out into rural areas and building larger, more modern houses. Some areas such as Kounoupidiana (on the peninsula of Akrotiri) or Daratso and Galatas (to the West of Chania) became virtual suburbs of Chania and prices in these areas climbed very fast. As commuting becomes more common place people looked further afield.

The bubble burst

Property prices increases of 20% a year were of course unsustainable in the long run. Several factors came together to reverse the trend:

  • First the main foreign buyers who were British and mainly earning their money (most in the form of pensions) in Pounds took a big drop in income when the Pound lost almost 30% of its value against the Euro. Cheap Greece was not cheap anymore and kept getting more expensive as cost of living and taxes increased.
  • Second: the same people who had come here hoping to find a cheap paradise realized that Crete, despite having a better climate, beautiful sea and nature was not only a paradise. It’s one thing to come to Crete on holidays and another to live here. When your friends and family are thousands of miles away and you don’t speak the local language some things can get difficult.
    By 2009 a lot of the initial euphoria had dissipated and the rush slowed down.
  • Then the Greek economic crisis hit everybody and the whole housing market (not just foreign) took a dive. It might have reached the bottom now (and if not now, very soon). The more optimistic are talking of an average drop in property values (from their peak time around 6 years ago) of 33% but 50% might be more realistic, especially when you consider that a number of foreigners were willing to pay grossly inflated prices.  With all the recent insecurities about Greece (staying in the Euro for example) the foreign market has been almost completely stagnant for the last few years.

What does the future hold?

Now (2014) that the situation is getting more stable and because prices are down to a much lower level the interest of bargain hunters is being triggered.

With many people (mainly foreigners who realized that Crete was not the dream they thought it was and want to go back to their country) desperate to sell property it is very much a buyer’s market.

If you want to build a house it will also be cheaper than a few years ago because builders have cut their prices (and land prices have gone down a little) but don’t expect the same bargains as buying a finished house.
I expect the market to very cautiously pick up, simply because there are bargains to be had but it will take a very long time for prices to reach their previous levels. 
I don’t think that Crete has a value as an investment but if you want to live here (full or part-time) it is certainly a very good place to be and in that sense, buying a nice place, if you have the money for it, is probably an excellent idea.but don’t expect to make money out if it.

 

 

What kind of properties will resell well?

Most properties (bar the exceptions listed below) will appeal to someone but a good view will always sell much more easily. It doesn't have to be a sea view but an open view. Easy access to the main road network is also a plus point. A quiet neighbourhood, no noise from traffic are also positive aspects. The rest is really a matter of personal taste.

What kind of property might be hard to resell?

Houses where building has occured all around, cutting off any view, are far more difficult to shift. Small places with nasty additions done on the cheap by the previous owner will also find few takers.
Anything with additions in breach of the original building permit will also be highly problematic to sell.

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Crete photo of the day
Crete Photo of the Day