Greek fiscal crisis and repercussions for the property market

Pages21-34
Date28 January 2014
Published date28 January 2014
DOIhttps://doi.org/10.1108/JPIF-08-2013-0052
AuthorProdromos Vlamis
Subject MatterProperty management & built environment,Real estate & property,Property valuation & finance
Greek fiscal crisis and
repercussions for the property
market
Prodromos Vlamis
Centre of Planning and Economic Research, Department of Land Economy,
University of Cambridge, Cambridge, UK
Abstract
Purpose – The aim of the paper is to present a review of the fiscal imbalances and debt crisis in
Greece and identify the possible links with the recent developments in the Greek property market.
Design/methodology/approach – The author follows a non-technical approach to discuss a
number of factors that have contributed to the fiscal crisis that Greece has been experiencing since
October 2009. The author critically analyses both the “internal” causes of the deteriorating fiscal
stance of the Greek economy (that is the prolonged macroeconomic imbalances that the Greek
economy faces and the credibility problem of macroeconomic policy) and the “external” factors that
might have contributed to the Greek fiscal crisis (that is implications of the recent financial turmoil and
the timing of the response of Europe to the Greek fiscal crisis). The author then studies the extent to
which fiscal imbalances and the debt crisis have affected the Greek property sector.
Findings – The analysis indicates that the current fiscal stance of the Greek economy and the Greek
property market crisis are intertwined.
Practical implications – The author believes that these results are useful, make a contribution to
the existing knowledge and provide some evidence that current economic recession has a considerable
adverse effect on the property sector in Greece.
Originality/value – One of the distinctive features of the paper is to critically discuss the direct and
indirect effects of the prolonged macroeconomic imbalances on the Greek property sector. To the best
of the author’s knowledge, none of the existing studies in this area provides systematic treatment of
the Greek fiscal crisis as a contributory factor in explaining the current crisis in the Greek property
market.
Keywords Greek fiscal crisis,Greek property sector
Paper type Research paper
1. Introduction
The financial crisis that unfolded in mid-2008 led to a dramatic increase of public debt
in many advanced economies. During the recent years, we have seen the
transformation of the 2007 US subprime mortgage loan market crisis into a
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1463-578X.htm
The author would like to thank discussants of the paper and conference participants at the 3rd
Academic Conference in Property Management, Val uation and Development, Regional
Development Institute, Panteion University, 3-4 December 2012, Athens, Greece, and seminar
participants at the Centre of Planning and Economic Research, 16 March 2011, Athens, Greece,
for useful comments and discussions. This paper has greatly benefited from the constructive
suggestions of Vassilis Monastiriotis. The author would also like to thank Nick Chatzitsolis and
Antonis Rovolis for valuable comments. Special thanks go to two anonymous referees and Nick
French, the Editor of the Journal of Property Investment and Finance, for their valuable
suggestions. The usual caveat applies.
Received December 2012
Accepted August 2013
Journal of Property Investment &
Finance
Vol. 32 No. 1, 2014
pp. 21-34
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/JPIF-08-2013-0052
Greek fiscal
crisis and
repercussions
21

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