Home is where the household income goes

Owning or even renting a home has become a bane rather and boon for Greeks – to say nothing of the taxes ownership and utilization of a property entail – as the latest Housing Europe report shows that Greece has the highest housing costs as a percentage of disposable income among all European Union states.

The cost of maintaining a home comes to 37 percent for average households, soaring to 65 percent for those close to the poverty line, the annual study found. The respective average rates in the EU are 22.2 percent and 41 percent.

The survey counts costs as rent for tenants or mortgage payments for owners, spending on heating, electricity, water and sewage, and telephony, as well as building maintenance and other expenditures.

The continual decline in household revenues – mainly through cuts to salaries and pensions – coupled with the steady increase in other costs such as power rates and heating oil, meanwhile, is putting an increasing number of households at serious risk.

Denmark comes second on the list, with 30 percent of people’s disposable income going into the maintenance of their home, followed by Germany with 28 percent. Both of these countries, however, have a low rate of home ownership compared with Greece, so the cost of rent takes up a bigger chunk of housing expenditure. This also suggests that Greece’s high rate is due to the decline in incomes after the outbreak of the financial crisis and the spike in unemployment, rather than to an increase in expenditure.

According to the latest available data, from the 2011 census, the rate of people living in their own homes comes to 73.2 percent, while 21.7 percent live in rented properties. In Germany, home ownership amounts to just 45.4 percent and in Denmark it stands at 51 percent.

According to EU data in 2012, Greece also had the highest share of people overburdened by housing costs at 33.1 percent. This country also tops other unenviable lists, as it has the highest rate of people with unpaid utilities (31.8 percent), as well as of mortgage borrowers with arrears and of tenants owing rent (both around 15 percent). The rate of bad loans has soared in recent years, with nonperforming mortgages climbing from 3.6 percent in 2008 to 28.1 percent of all mortgages in end-2014.

It is therefore hardly surprising that, according to social workers, the number of homeless rose 25 percent in just two years, from 2009 to 2011, to reach almost 20,000 people. Obviously that figure would have been far larger had it not been for legal measures protecting primary residences from repossession and particularly homeowners whose annual household income is below 35,000 euros.

The disproportionate burden on homes has also had an immediate negative impact on the property market, as despite the crunch in construction, particularly so since 2011, the number of empty or unsold properties remains exceptionally high.

At the same time, house transactions continue to decline, shrinking last year by a remarkable 33.8 percent compared with 2013, when the annual decline had amounted to 21 percent. The total number of house transactions recorded last year was below 10,000 according to figures by the Bank of Greece.

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