Cephalonia, oh Cephalonia. Even when the sun shines in England I long to be on that glorious island in the Ionian sea, land of milk and honey, superb wines, big fat olives, big fat grapes and ... er, a big fat mortgage which has become morbidly obese because of the Greek financial crisis.
Let me explain. When we had our villa built in 2003 we paid £264,000 for a custom-built four-bedroom, four-bathroom house with a large pool. We had about £80,000 as a deposit and borrowed the rest from the Alpha bank, one of the most reputable banks in Greece. So far so good. It was a lot of house for what we paid, or so we thought. We had fabulous holidays, made lovely Greek friends and enjoyed every minute of the time we spent there with friends and family.
Cut to 2009 and Greece was walloped by the recession, more than any other European country. Almost overnight the monthly mortgage repayment went from about £800 a month to £2,000. It also coincided with me giving up full-time work in London for the life of a jobbing freelance in the shires. When we built our house the exchange rate was €1.40 to the pound, but it came to the point where it was almost one for one.
And it wasn’t just the mortgage that was the problem. The cost of electricity and water also rocketed, as did the money demanded by maids, gardeners and the laundry company. The last time we visited, in May last year, I spent all my time washing and ironing sheets while my husband toiled away in the garden in boiling temperatures to keep the maintenance bills down. We never put the air conditioning on. What was even more annoying was that the hire car and petrol cost twice as much as previous years.
When we fell in love with Cephalonia, a restaurant lunch for two, with a carafe of house wine, was £15. The same lunch now costs about £35 and a lot of restaurants don’t take cards, claiming that their machine is broken.
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The Greeks are a proud people, and Cephalonians are very proud indeed. The scars from the Second World War, when the Germans massacred the Italians occupying the island are still raw. Just about everyone has read Captain Corelli’s Mandolin and in bars you can hear elderly gentlemen bemoaning the national debt and muttering darkly about how much Germany still owes Greece in outstanding reparation for their wartime occupation.
Many people have lost their jobs, but the statistics do not reveal the thousands who still have jobs but have not been paid for many months. They have no income, but if they leave, they have no hope of ever getting back what they are owed. It has left a huge proportion of Greeks with no money to spend. As a result, retail businesses are collapsing and shops are being boarded up. But such is the perversity of the international property market that British property-hunters are training their eyes on Greece, and especially the islands, looking to snap up villas at knock-down prices because their owners can no longer afford to keep them.
Our friend Dennis Koumoudos, the owner of Unique Villas, manages 48 villas for foreign buyers on the island and is urging his clients to tread water until the sea around Greece becomes calmer. He says: “People who borrowed to build villas are in a better position than those who bought outright because all the banks are prepared to negotiate the loans as part of a nationwide effort to ease the pressure on the Greeks. Property repossessions, and specifically villas, have been frozen for the forseeable future.
“Also most of the loans were fixed rate, so they are not affected by the hiking of the interest at present. What is hitting owners hardest is the rising cost of electricity, water, maintenance and heavy taxation imposed by the Government.”
Koumoudos takes the optimistic view that once Greece is secured into the euro (we should know in the next 12 months), then interest in Greek property will pick up because investors know there are bargains to be had.
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And so after much heart-searching we have decided to take Koumoudos’s advice not to panic. We have switched our mortgage to an interest-only version and we won’t be going to Cephalonia this year because we can’t afford it. We are determined to keep the house and, fingers crossed, perhaps next year, when the mortgage has become slightly more manageable we will be sitting on the balcony drinking a big fat glass of wine.
For more information, see uniquevillaskefalonia.co.uk, 020-7183 5383