Friday, 4 May 2018

Housing crisis

Last Monday afternoon, after getting a couple of jobs done in the town, I suggested to my husband that we take a walk to the harbour. We had only just crossed the road from the chemist where we had bought some sunscreen when two Greek women approached us and asked us if we knew of any 'houses' (= apartments) for rent. Just like that, out of the blue
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They were from Chalikidiki (the peninsula that is home to Mt Athos). They said they needed a home here for just two months. One of the women was a teacher (young woman, three months pregnant) who had been appointed by the Ministry of Education to a school in Chania for the last two months of the term. (The MoE often does this: schools could be short of a teacher for the whole year, and the a teacher will be appointed in the last couple of months in the year - often as a cost-cutting measure or face-saving tactic. It's rarely to do with bad organisation - they know what they're doing.) The other was her mother who came to help her find a place to stay only because the 26-year-old teacher was pregnant (otherwise, the mother said, she would not have accompanied her daughter, but she was worried about the girl's health). After that, the teacher would go back home. The teacher said that if she didn't take up the opportunity offered to her to enter the state teaching system, she feared that she would lose any future possibility of finding state work. Her mother was equally upset to see her daughter having to make such a difficult choice: for the last six years, she had been working various jobs in her home town and put aside the idea of entering the state school teaching system, and instead had settled down, entered a relationship and was now setting up her personal life - and now this. I understood them both and felt for them.

My renovations are going along very slowly. The reason why is that I have renovated properties before, and I know I will not get the chance to create the perfect home if I don't get it absolutely right at this time. (This is the same reason why we don't live in a perfect home ourselves.)

I told them the harsh truth: it's the beginning of the tourist season in Hania and for this reason, you won't find anything in the town, and even if you do, you would be hard pressed to find anything cheap because everything has gone up for airbnb. They said that they had already experienced this: she would be making not much more than 1000 euro per month, and she was surprised potential landlords were asking for rental prices that came close to  nearly all her salary. They had been quoted 750 euro per month for the only positive response they got - electricity usage not included. They were practically homeless - and this situation is not at all new in Greece: state workers seconded to islands like Mykonos and Santorini have ended up camping at the beach in order to resolve their own housing problems

I gave them the number of a real estate agent they could call (which I knew would not really prove very helpful). And then, just like that, out of the blue, I suggested that if the teacher really could not find any place suitable, she can come to live in our granny flat (my mother-in-law passed away last year: the school she was assigned to is relatively close to our house). Imagine the shock on my husband's face when I did that: it really didn't occur to us that the situation could be that bad. But he saw the logic later and he agreed that it wouldn't be a bad thing to offer space for a lodger, and we would make some money on the side too. Not the extraordinary amount she was being quoted - something more logical. (She hasn't called us yet, so I suppose she may have found something. Either that, or she decided it was not worth the effort, and has gone back home - she mentioned that option too.) 

Now here's the catch: it's not full capacity anywhere in the rentals business in Hania at the moment. It's very busy, that's for sure. But no one wants to commit their property to a long-term stay on the "cheap", because they prefer to take the risk to wait until they get more money on a daily rental basis (i.e. airbnb style). Homes - rooms, houses, apartments - may not even get fully booked in any given month, but even ten days (one third of a month) will easily fetch 500-750 euro, depending on the location, size and condition of the property. The thinking of the average landlord in Hania is: Why rent a property out for a whole month at this price, when you can rent it out for just half a month? (Less damages, less cleaning, less utilities usage, lower costs.) 

Airbnb backlash

While there can be a backlash from the citizens themselves (to the likes of what we have heard happening in places like Barcelona), this isn't happening here yet. We see anti-airbnb flyers posted on walls, but they are coming from hard-core anarchists who are against everything and for nothing (so they can't be taken seriously). Given that I've just entered the property market myself, I think it is a wise choice on my part not to get involved in airbnb-ing my properties (currrently under serious renovations) for the whole year. Airbnb in Hania is really only a good choice for 3 months. The tourist season is still highly seasonable here. We rely on lo-cost charter-style airlines to fly tourists into the town, and there is much less demand for tourist rentals in the remaining 3 months of the tourist season. Come winter, when the international flights into the town stop, there is literally no demand. Some hotels stay open, but mainly for Greek business travellers. Hostels and purely tourist accomodation units are hermetically shut - you won't even see a light on in the window for 2-3 months in a row. So my ideal tenant would be a student for the 9-month academic term, and tourists for the remaining months. But very few people think like me. They prefer to risk waiting for the bog $$$. At the same time, I also understand the landlords (being one myself): people are really doing up their places now and want to make money. This is a HUGE change compared to the past: during the crisis, the rental market was a complete disaster. Even before that, tenants would abscond from paying the rent (this has happened to me too) - and landlords had absolutely no recourse in trying to get any money back. So it's a bit of tit for tat.  

The property market in Hania is doing quite well for now. it was never really in crisis in the first place, even during Greece's most troubled times in the last few years. Some people want to sell property... but not desperately. Cretans don't really have the money to invest in property themselves. But they are willing to sell property at the right price. And they do not feel the need to lower their standards to make a quick sell. Both local and foreign investors (yes, plenty of them) are finding it difficult to bargain down a price because Cretans will get eventually get sick of them and refuse to sell specifically to them. (That's a good sign: we clearly don't have an identity crisis.) 

That was then, this is now: good renovations take time. 

I have no regrets that airbnb took the town here by storm. It's really cleaned up the place. There were so many rundown properties (and there still are) before airbnb came along. Now, at least the town is cleaner and people are investing their savings in renovations. In other words, people are more willing to spend money doing up their property because they can see light at the end of the tunnel - they will get something back for their efforts. This all points to rising property prices in the future. Even the OECD is predicting a good future for Greece: GDP looks good, so do employment levels, people's spending power has increased and state surpluses look stable - it's basically what I have been predicting all along, that Greece is out of crisis, and on the rise. The problems that Greece could encounter are not really financial:
- austerity fatigue on the part of the people (but as I have often said in my blogs, people are used to living with lower standards now)
- collapse of reform program (highly unlikely: leftist Syriza who seized power with their anti-reforms manifesto have executed them since gaining power, albeit begrudgingly)
- inadequate debt forgiveness (but even Germany is now agreeing that it may be the right time to forgive some Greek debt)
- geopolitical dangers (eg Turkish aggression, more refugees - this puts pressure on the tourism market, but this is a global problem, not a solely Greek one. We are affected due to geography rather than mentality.)
- bank systemic crisis (banks may fail because people don't save their money there anymore - they don't make enough to save in the first place.)
- lack of private investment (this has been a constant demand on the part of our moneylenders, and we have never really pushed it very far, despite our financial problems - but western capitalist economies are seen to be failing at this time precisely for this reason)
- austerity fatigue on the part of the people (but as I have often said in my blogs, people are used to living with lower standards now)
- collapse of reform program (highly unlikely: leftist Syriza who seized power with their anti-reforms manifesto have executed them since gaining power, albeit begrudgingly)

Old, beautiful, serene, timeless, multicultural Hania 
Crete is recognised as the only island in Greece that is independent in terms of being able to survive the whole year without needing to import basic resources (= food, water). We import a lot of things, but if some kind of catastrophe were to happen and imports were stopped, we would actually make it through. So one could say that Crete is a wealthy island because the locals are all involved in multiple income-making work, and we all have 'hidden economies' of some sort, eg gardens full of veges, fields full of trees, olive oil as a basic commodity which is also exported at a good price, a roof over our head - two homes in many cases: the one we live in and an inherited one. It is well known in global economic terms that Greeks have a high rate of home ownership (80% if I am correct). So who needs to rent here? Who are our 'visitors'?
- tourists from all over the world, but mainly Europe; half the European tourists of Hania are actually Scandinavians, who like to stay at resort hotels. Other regions of Crete (eg Iraklio, Rethimno, Paliohora) are preferred by other nationalities, who have different preferences. So there is something for everyone in any part of Crete. We had more than 1 million flying-in tourists to Hania last year, while Iraklio had more than 3.5 million flying-in tourists (cruise ship tourists and travellers using domestic flights aren't included in these numbers). Most people rent hotels, rooms, villas, airbnb, etc and a small segment goes camping.
- public servants stationed to Crete, coming from a different part of Greece for their work (eg police, doctor, office admin staff, military officers, etc etc etc). Not everyone will translocate with their partner/family. It's not affordable, and anyway, many couples are both state employees, and they rarely get a transfer to the same place as their partner, and at the same time. (We are in the same boat as many of our western-country counterparts, and have been living like this for a long time).
- students attending the highly acclaimed (both in Greece and abroad) Politechnio (this doesnt mean polytech in the classic English sense - it's actually the most advanced university level in Greece, and the basic bachelor degree, without doing a Master's degree, lasts a minimum of five years), as well as technical school (polytech in the classic sense), merchant navy training centre, and research centre (where i work).  The town lacks appropriate student dorms (we have very few of them), so most students (90%) will find a place to rent. Due to the establishment of airbnb in Hania, students have been finding it increasingly difficult to rent a place in Hania during their study period, due to the rise of airbnb.
- military personnel: mainly Americans, also Europeans, as well as civilian staff attached to the military; this little flurry is all due to the US army base in Hania, and it includes visitors from warships (the USS Harry S. Truman is on its way here soon), which bring in huge numbers of young soldiers on the off season. They come here for recreational purposes (after a long period spent at war or at sea) and they are allowed to come off the ship and stay in a rental property if they wish. They usually prefer coastal areas and places with a pool. They come for relaxation, not urban sightseeing; some hire cars, so they can rent further out of the town). If you follow the news, you will know that the US has asked for long term renewal of the military base in Hania (at present, it has short-term renewal, even though it gets renewed all the time). The US is here to stay. If I am correct, even Donald Trump has uttered the word 'Souda'. (He might have called it 'Soda,' but this is not important). Souda Bay is one of the deepest natural harbours in the Mediterranean and is easy to defend. It is also the largest natural harbour in the whole of the Mediterranean - located right here in Hania.
- lastly, there are always school trips, old people's clubs, and other cultural/educational groups, from Greece and other countries. They often come in the off-season, when they are likely to find good prices for accommodation - because most places are closed, given our seasonal tourist nature.

We also have a lot of immigrant workers in Crete given the better employment conditions here, mainly Eastern Europeans - Albanians and Bulgarians (they don't look too different from us), and some Arabs (they don't act too differently from us). They live here on a permanent basis. They go back home to the mother country, but they recognise that life is better here for them. And in fact, they've been here for years. If they are lucky, they are on 'old' rent, so they don't get price rises; if not, they have basically been pushed out of the main town due to the rising rental prices (due to airbnb). They live in similar ways to how Greek immigrants lived when they went to the New World - many people under one roof, all sharing facilities and trying to find a lucky break which will give them upward mobility - which is getting increasingly harder these days. They mould in very well with the locals - but their housing is usually rented. They are more likely to live in old property that has not been maintained. These are the people who are really being affected by being priced out of the rental market.  

Hania has been breaking tourist arrival records for the last three years, and this is expected to continue. So the potential for renting out property to these arrivals is very large. Somewhere I read that the US Travel Advisory for Greece is at the best level (ie we are a safe destination, one of the safest in the world). This is really ironic, if you consider that 10 years ago, US travel advisories would warn against going to Greece, due to potential harm from street demonstrations. (This shows how little the US and the rest of the world understood the nature of Greek society - we are not trigger-happy and we don't like war.) These days, jihadi attacks are crucial in such calculations - something we haven't yet experienced here. Westerners read and believe this kind of stuff so it's easy to understand why travel to Greece is on the rise, and it is predicted to get better. Despite being surrounded in the north, east and south by unstable countries, Greece is regarded as a pillar of stability in the region. The refugee crisis hardly affects Crete, which is difficult to access without safe secure means of sea transport.

This is no time for complacency. Like banks, bricks and mortar may also fail in natural disasters like earthquakes. Crete is a seismic zone - I've felt some pretty strong shakes here with a maximum 6.3 Richter, but they've never caused great damage to the town. I like to use the old Franciscan monastery in Hania on Halidon St as a reference point to illustrate this. It was built sometime in the late 1300s during the Venetian era, and it presently houses the archaeological museum of Hania (which will be moving to a new location soon), after serving a variety of uses over the centuries. A very strong earthquake (possibly measuring 6.3 Richter) was documented in the letters of a traveller on 26/11/1595. By that time, the Venetians had been ruling Crete for three centuries, and had already performed a lot of construction work. Many of the new/tall buildings of the time sustained damages on that day, but in the descriptions of the earthquake, it was pointed out that the Franciscan monastery was unharmed. Construction of the landmark lighthouse in Hania (a few metres away from the Franciscan monastery) began in 1595. The lighthouse does not have the original form now as it had back then, but there has always been a lighthouse in the same place since it was first built. Geological reasons protect Hania from the worst effects of earthquakes.

So for the time being, we have it good here in Crete. But we still need to find solutions for our housing crisis. I wrote this post today because, just this morning, I was told about yet another teacher who needs to find a place to live in the town. When people can't satisfy their basic needs - food, water, and a place to live - this is known as a crisis. We never really had this kind of crisis in Hania. But as Greece comes out of her recent crisis, it seems that Hania is entering a unique one of her own. And right now, even I can feel its effects.

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