kathimerini.gr
Soaring Greek Rents Threaten Economic Growth
Morgan Stanley's report on Greece highlights a 10.5% rise in rental prices, exceeding the 2.1% projected inflation for 2025, impacting 35% of Greek households who rent, mainly lower-income ones spending at least 22% of their income on rent. The limited housing supply post-economic crisis is a key factor, impacting consumption and potentially slowing economic growth.
- How does the significant increase in Greek rental prices, exceeding overall inflation, impact lower-income households and the broader economic outlook?
- Morgan Stanley highlights a sharp rise in Greek rent prices, reaching 10.5%, contrasting with the overall inflation decrease and impacting lower-income households significantly. This surge, despite overall inflation moderating to 2.1% in 2025 from 2.7% in 2024, threatens disposable income and real consumption for 35% of households renting homes.
- What are the underlying causes of the sharp rise in housing costs in Greece, and what policy responses might mitigate its effects on consumer spending?
- The steep increase in rents stems from limited housing availability due to underinvestment post-economic crisis. This housing shortage disproportionately affects lower-income households, who spend at least 22% of their disposable income on rent, exacerbating existing economic inequalities. Increased construction is suggested as a potential solution.
- Considering the projected economic growth and decreasing debt-to-GDP ratio, what are the potential long-term consequences of the persistent high rental inflation for social equity and economic stability in Greece?
- The impact of rising rents on the Greek economy could lead to a slowdown in private consumption, potentially offsetting the positive effects of the Recovery Fund and foreign investment. While Morgan Stanley forecasts growth of 2.2% in 2025 and 1.8% in 2026, the rental crisis poses a downside risk to these projections, highlighting the need for policy intervention in the housing market.
Cognitive Concepts
Framing Bias
The article frames the rising rent issue as a significant risk to the Greek economy, highlighting the potential impact on lower-income households and real consumption. While acknowledging positive economic prospects, the emphasis on the negative consequences of rising rents sets a cautious tone.
Bias by Omission
The analysis focuses primarily on the economic impact of rising rents and mentions the impact of a weaker dollar on tourism but doesn't explore other potential contributing factors to the rising cost of living or other sectors of the Greek economy that might be affected. The impact on different demographics beyond low-income households is not detailed.
Sustainable Development Goals
The significant increase in rental costs in Greece disproportionately affects low-income households, consuming a substantial portion of their disposable income (at least 22%). This can lead to decreased living standards and increased poverty risk, counteracting progress towards poverty reduction.