This is about the role of property in contemporary society, historically deeply rooted in capitalist economies. It will however focus on Greece. The reasoning behind writing this is my own set of strong views on the state of property in Greece, but I am sure similarities exist with many other “undeveloping” countries. Construction of new residential and commercial property in Greece is, at the moment, dead for many serious reasons. An association with the present state of the country would excuse one to perceive it as a symptom of the financial disease torturing the country. It is the drug that weakened the organism to the extent that its immune system was neutralised. Here is how I see it: When, in the 50’s, government decided to centralise production in urban centers, mainly Athens and Thessaloniki, it allowed an almost completely unregulated build-up of these and other cities. In next to no time the houses turned into blocks of flats for the workforce that moved to the urban centers for work. Social Mobility 101, I hear you say. Indeed. Except, nobody kept track of how many buildings were built, how, where and with what provisions (parking etc.) In theory Planning Permissions (PP) (Πολεοδομία) has a record of all this. Well, I say all …except nobody knows the extra bits build in addition to what PP originally allowed and the alterations that came later. A block of flats that would originally ‘produce’ say 1000 sq.m. of flats may have produced 1500. Three bedroom flats became 4 or 5 bedrooms overnight. I won’t even go near summer residences, every time I try to explain ‘αυθαιρετα’ to non-Greeks I lose the will to live. In short, these are buildings, typically but not exclusively residential, built without any permission on public land. …Don’t ask.
Lack of professionalism and ‘tradition’: The kind and number of people who got involved with all aspects of construction and property development will be difficult for non-Greeks to comprehend mainly in terms of how they were allowed to do it. Apologies to foreign readers for the reference – “Οικοπεδα με δόσεις, ο Θεοδόσης” και το υπολοιπο φανταζομαι το ξερετε.
Now, the implications of this.
Supply of property was never related to demand. It was left to the market to regulate it. For decades Greeks built or bought properties as they saw them as the safest investment for them and their children. I won’t go into the grand plans of the new generation living upstairs or next door to the previous one, never having to pay back a mortgage. The first bit of it sounds good on paper, especially if you are the mother-in-law, and now that I think about if it did not depend on borrowed money it could have worked. After all it did for about 40 years.
Here lies (part of) the problem: If you have, at any given time, more properties than are in demand, the whole structure goes down. If one property loses value, the one next to loses it too. People’s savings that became bricks and mortar are devalued – this means that people’s work means nothing anymore – and those who bought with a mortgage – inflated prices and all- are in negative equity, with an asset that is now a liability. The banks’ relation with property also collapses, they don’t lend, the money that went around (and returned to the bank with interest) does not anymore, economy collapses as this was also dependent on this borrowed (and indeed virtual) money. Greece went one step ahead. In the culture of not paying, rent remained unpaid, mortgages remained unpaid, even when tenants could have paid; regulation was and still is tenant friendly to the extent that once a badly paying tenant is ‘in’ it takes a lot of time and money to get rid of them. Meanwhile the property loses value, a factor not calculated by primitive Greek property law. Part of the end result is that the property that was largely built or bought with the cheap borrowed or tax-evasion money that came into Greece is now worth nothing. Same as the property of the neighbour who may have worked very hard for the last 40 years and bought a summer house to retire in. Part of the 340bn Euros that Greece is expected to repay is these bricks. These can not produce growth. Their ‘state’ has killed social mobility. Furthermore, property is also useless for those owed all those billions of Euros. It can not be used as payback. Even if it could, why would anyone want a (now heavily taxed to even have, let alone rent out or try to sell) property that is very clearly a liability unless one will live in it, and who will want to come to Greece to live in it at the moment? Island properties, I hear you say? Well, the proof is in the pudding. Would you buy?
I know this whole thing flip-flops between an exceptionally superficial marxist and a neo-liberal analysis but really is neither, it is an observation.
There are also many other aspects regarding property. For example, every building that changes takes a bit of the past with it. Built with purposes other than profit in the ‘distant’ past, many buildings often had special links to places people and events. Not any more.
I am not over with this,
I’ll be back – like Arnie