Greece – GREXIT or not – Where’s Archimedes to make the maths tally?

July 6, 2015

Markets don’t like uncertainty and the Greek debacle is taking its toll on the Euro. This may be good news for property buyers outside the Eurozone, whose currencies have strengthened against it.

Greece property market – shaken but not stirred?

Cyprus Limassol beach propertyProperty buyers get rattled by major upheaval and uncertainty. We witnessed hesitation when there was unrest in Turkey during the Summer of 2013, in the aftermath of the demonstrations in Taksim square in Istanbul, about some of the decisions made by President Recep Tayyip Erdogan’s government.

Greece needs to manage an overhaul of, not only the economy, but its pensions and taxation systems too. 80 percent of Greece’s primary spending is on pensions and wages, so it cannot move forwards without doing something about this burden. The Greek pension funds receive transfers from the budget of about 10 percent of GDP annually, according to the IMF. Bear in mind this compares to the average in the rest of the Eurozone of 2.5 percent of GDP. The standard pension in Greece is pretty much at the same level as in Germany, yet on average, retirement age is almost 6 years earlier than in Germany.

The Greek Tax system is like a colander. It not only needs transparency of tax rates, but on collection of what is due too. Greece has among the largest gaps in the European Union on VAT revenues, that is to say, between what should be collected theoretically and what is collected in actuality.

Greeks need to make their sums tally. They seem to have forgotten they gave birth to Archimedes the famous mathematician and scientist. He must be turning in his grave.

Whatever the situation, property buyers will need to be in it for the long haul, given any solution, whether inside or outside the EU, is going to take a long while to bite and help turn the country around. This might be time for those, steady-of-nerve, to pick up some great property-deals, but the majority may well want to wait for the dust to settle a bit more.

How does this affect Cyprus?

It is important to bear in mind Cyprus is a Republic in its own right and a separate member of the EU. It is not the same country as Greece, albeit the two countries have a strong trading relationship.

Cyprus has made big inroads, whilst Greece has been resisting. Cyprus has seen the return of economic growth. The Cypriot people have shown their willingness to carry out difficult reforms and they are now starting to reap the rewards. Cyprus has restructured the banking system, they have successfully lifted any residual capital controls and they have returned to issue debt in the international market, proving their public finances have strengthened immeasurably.

Please get in contact to chat your plans through as we have many more properties off-website. Telephone +44 (0) 1932 849 536

Property Venture® is an award-winning, UK-based agency for overseas property who helps people buy investment property and holiday homes in Europe, more easily and safely than they can on their own, because we offer grounded common-sense advice.

The focus is mainly greater Europe: Poland property, UK investments, Spain property, Turkey property, Cyprus property

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