Greek election: A victory for property buyers?

Alexis Tsipras, the new Greek PM, campaigning in 2014 Photo: DIE LINKE. in Europa

“Hope is coming!” read the campaign slogan of Syriza, which won Greece’s general election last night.

The anti-austerity party, led by Alexis Tsipras, won 36.34 per cent of the vote, beating the outgoing New Democracy part, which received 27.81 per cent of votes. The victory marked a significant moment for Greece, as well as the eurozone, as the country sided with the party pledging to put an end to the current wave of austerity measures that have been required of Greece since it accepted a bailout to help tackle its crippling deficit.

The country’s economy officially returned to growth in Q3 2014, ending six years of recession, as GDP rose 1.7 per cent. Nonetheless, conditions remain hard for Greeks, with unemployment at 25.80 per cent (as of October 2014), far higher than its average of 14.54 per cent over the past 16 years, and rising to almost 50 per cent for young adults.

Syriza’s promise to renegotiate its bailout with the “troika” of the European Commission, European Central Bank and International Monetary Fund therefore received strong support from voters. The party did not receive an overall majority, though, causing it to team up with another anti-austerity party – the right-wing Independent Greeks – to form a coalition government.

“Greece leaves behinds catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and anguish,” Tsipras declared on Sunday evening.

The election followed a recent announcement from the ECB that quantitative easing will be introduced in an attempt to boost the eurozone economy. Indeed, uncertainty is already in the air for traders and investors, a mood that saw the single currency plunge to an 11-year low immediately following Syriza’s win.

Greece’s new Prime Minister, though, has said that the country will stay in the euro. A temporary suspension of the bailout scheme is predicted, as talks begin with creditors, including the pro-austerity German Chancellor Angela Merkel.

President of the EU Commission Jean-Claude Juncker wrote to Tsipras to congratulate him: “Promoting sustainable jobs and growth, while ensuring fiscal responsibility, is a common challenge across the European Union. The European Commission stands ready to continue assisting Greece in achieving these girls.”

A member of Merkel’s party told the press that caution was required to keep the equilibrium of austerity measures across the Eurozone: “We must not reward the breaching of agreements. That would send completely the wrong signal to other crisis-stricken countries that would then expect the same treatment.”

Achilleas Georgolopoulos, European rate strategist at Lloyds Bank commercial banking, told The Telegraph that Syriza’s lack of an outright majority has left current market reaction more muted that first feared. Nonetheless, the longer-term effects of the party’s victory are still unclear. Syriza’s attitude will undoubtedly have a “dramatic impact” on financial markets, warns , and could possibly see the country default on its debt and exit the Eurozone.

With the GBP/EUR rate rising, though, uncertainty and any ensuing weakness in the single currency could still spell some positive news for overseas investors seeking favourable conditions. Indeed, despite the surrounding economic concerns, Greece climbed five places into the 10 most popular destinations on at the end of 2014, with Spanish, French and Portuguese property all seeing demand rise significantly in the second half of the year.

Charles Purdy, CEO at the money transfer specialists, tells that there “not been a better time for Brits to purchase property in the Eurozone”.

“In the last seven years, there has been over 20% depreciation of the euro, and by association, house prices in Europe. For example, in late 2008 when there was almost parity in the GBP/EUR (1.03965, December 2008) rate, a €300,000 property would have cost a British buyer £288,558. Today that same amount would cost a British buyer nearer £224,500 – a saving of almost £65,000.”

“Of course, nothing is certain in currency markets,” Purdy adds. “The euro may well recover some of its strength in the coming weeks, should the Syriza party come to an agreement that keeps Greece in the euro or if the QE programme starts to boost the continent’s economy.”

The morning after Syriza’s triumph, the outcome of the Greek elections is not yet clear. For British property buyers, though, hope may be coming.