Will The €1 Billion Renters’ Benefit Address Greece’s Deepening Housing Crisis?

On Tuesday April 22, Greece’s Prime Minister gave a live television address announcing a 1 billion euro benefit package aimed at “providing an answer to the housing problem.”

The housing problem is a severe one: rents across the country have ballooned to unattainable heights, demand far outstrips the supply of available units, and buying a house is a distant dream for many across Greece.

Since 2017, the price of purchasing an apartment in Athens has increased by nearly 90% while rent prices have swelled by over 50% over the last five years. According to Eurostat, Greek households currently face the highest housing cost burden in the EU, with the average Greek spending over 35% of their disposable income on housing.

In a country where the minimum wage has just recently been increased to 880 euros a month, you would be hard-pressed to find an apartment to rent in the capital city for under 300 a month. A study last year by the E-Real Estates network found that in Central Athens only 6.4% of properties suitable for families (i.e. with two bedrooms) were available for €600 or less. That’s before the electricity, water, and building maintenance bills.

In his address, Kyriakos Mitsotakis said: “I know how hard it is for our fellow citizens who are renting, and their relief is my first priority.” He went on to state that, starting this year, renters will be given a benefit equal to one month of their rent per year, to be deposited in their bank account in November. A similar yearly benefit was outlined for pensioners.

Mitsotakis presented the benefit as a form of relief made possible by economic growth resulting from investment and a crackdown on tax evasion – as the fruits of fiscal discipline. “With confidence in the potential of the country and the abilities of society, I have made the assessment that difficulties can be overcome and become opportunities,” he stated. “This is reflected in our new initiatives which provide that, as the national economy improves, so will the economic position of the citizen, all in the corresponding time.”

Opposition political parties were quick to denounce the proposal, calling it a “communication trick” that didn’t address the root issues. Online commentators snarked that the measure was a flashy distraction from the careening cost of living, and that it would simply lead landlords to hike rents even higher.

Many of the interventions the Mitsotakis government has implemented and proposed to address the housing crisis are similar cash-in-hand measures. The government has touted its My Home program, now in its second iteration, which subsidizes the purchase of old apartments by young couples by providing them with low-interest loans to buy their first home. There is also a housing benefit of up to 70 euros a month for low-income renters.

“These policies that are developed are aspirin, hansaplast for an illness which is more serious than that,” said Thomas Maloutas, a professor of Social Geography and Thematic Chartography, speaking on To Vima’s Explaining Greece podcast. “If I give you money and on the other hand I’m the market, I realize that now you have more money than you had before. So what do I do? I raise the prices. So it’s a very easy and very quick reaction of the market. What you have to do is produce new affordable housing. We stopped doing it a long time ago and abolished the two organizations that did it in the past.”

One body that used to help housing access in Greece was the Worker’s Housing Organization (OEK), which provided some social housing along with individual subsidies, low-interest mortgages, and lotteries to widen access to home ownership. The agency was dissolved as part of the austerity measures imposed by the troika during Greece’s economic crisis.

The Bank of Greece – in line with the general consensus – blames the desperate housing situation on a market scarred by the crisis, with available units being swallowed up by speculators, bought to secure a “golden visa”, or turned into an Airbnb.

“What has changed is that housing during these years has been commodified and financialized,” concurred Maloutas. “Through the crisis and mainly in the aftermath of the crisis, housing units became more and more investment products and not use values. So when you have investment products and you have at the same time a rising demand, which is not local– it’s tourism, digital nomads, golden visas–you have more and more difficult conditions to access. And this is where we are now.”

The Greek government has introduced some interventions aimed at addressing these issues– restricting short-term rentals in certain areas, creating tax incentives for owners who convert short-term rentals into long-term leases, and looking to restrict what properties can be used to purchase a golden visa.

But these measures have not yet made much of a dent in the issue. A survey published in April by Focus Bari found 64% of Greeks agree that rents are unaffordable compared to incomes. A full 86% are worried about their financial situation.

On Wednesday, Mitsotakis urged patience and confidence, mentioning a platform that will help citizens check which programs apply to them along with plans to establish a housing policy observatory. “Affordable housing is a right for everyone and an obligation of the State,” the Prime Minister said.