Would you believe it is 8 years since we had the credit crunch? It now seems like a lifetime ago that property prices fell in many areas for up to two years and the number of properties that were sold dropped by half.
Part of the reason it is so hard to remember how bad it was is because over the last few years, depending on where you live, prices may be up to 60% higher than they were back at the previous market high, so the credit crunch is distant history.
But it is important to remember that other places such as Northern Ireland, Liverpool and Bradford are still seeing property prices 30% or more lower than the credit crunch. And although prices are moving forward in London and the Home Counties plus other affluent areas, we aren’t seeing that level of growth replicated in cheaper areas across the country such as Nottingham, Leeds and Cardiff.
Of course the property problems we had were caused by three things:-
Finance to buy property pretty much disappeared overnight
The economy started to crash so people’s earnings and jobs were put in jeopardy
Confidence is a big influence on prices and rents and people lost this until 2013
Why could Grexit cause property prices and rents a problem?
Property is affected by the economy and vice versa, but it is particularly hit hard if the amount of finance available reduces.
And this is the main reason why, if Greece do not pay their bills, problems could arise for the banking industry and if they go backwards, that could hit buyers and homeowners in the UK.
If another mini banking crisis holds back economic growth, that will hold back property prices and rents will be held down as it’s likely to impact negatively on wages which we now know are a ‘natural cap’ on rents charged.
How likely is a Grexit to hit property financing?
Words from the FT help to stop us worrying too much. Apparently George Osborne has said “far lower than it was three years ago” and is “relatively contained”. Appparently our banks have just over $30 million sitting in Greek Banks which is of risk and an exposure of £3.2 billion – so as long as no other scary stats creep out that we weren’t aware of, this looks pretty containable.
Who else will be effected?
Of course there are lots of people who might be hit hard at a local level if Greece exits from the Euro:-
UK retirees in Greece
There are over 6,000 people living out their later years in Greece and if it’s economy does badly, so will the price of any properties they have bought and this may affect retirement income as would there be a temporary issue if they couldn’t get hold of enough cash to survive on the a daily basis.
As long as people aren’t looking to sell at the moment or during the crisis and exit, if it happens, then they are likely to be able to ‘ride out’ the storm, but anyone hoping to sell in the next six to 12 months who needs an international buyer is likely to be disappointed. People don’t buy houses, even in the sun, when there is a lot of uncertainty.
For those trying and not succeeding to sell just now, a better option may be to look at letting the property out instead, alternatively you could cash in now, just get what money you can and return home without any more worries.
For more information about what’s happening and it’s impact the government will keep you up to speed.
Planning to let as a holiday home?
Visit Holiday Lettings for more information, it’s not straightforward!
It is worth consulting the foreign office to make sure you protect any money you have in Greek banks though.
If you are just holidaying in Greece or one of the islands, keep up to date with .gov advice.
Greeks use London property as a ‘safe haven’ for their money
Well they are back! Despite hugely expensive taxes now on foreign property ownership and high stamp levels if buying for millions, if you are a resident of a country which is about to crash out of the Euro it’s highly likely that putting your money in bricks and mortar in the likes of London is going to be extremely attractive.
As such Grexit could, over the summer months, cause a bit of spike in demand for prime property.
Greek holiday homeowners
From a tourist perspective and renting property out to holiday makers, as long as there is food on the shelves and fuel in the stations, you will probably be fine. Most holiday makers can take cash and economic crashes tend to make the currency good value for money as well as costs while holidaying there.
So, best to prepare for some lower rental prices and concentrate on getting people booked up, making sure they bring cash in Euros with them to pay.
Exporters to Greece
If you run a business which deals a lot with Greece, it may be a rough year. If you own a home already, make sure you talk to a broker to check you are on the best mortgage deal. This will help you keep your costs as low as possible and hopefully help to keep your property if business isn’t too good.
For more information, visit the .gov website