The Greek election at the beginning of this month shocked many. The election had been called early by then Prime Minister Costas Karamanlis, who said that he was doing so because he could not effectively govern with a one seat majority, having lost several senior minsters to scandals over dodgy economic deals and handling of natural disasters like forest fires and riots.
I doubt he expected the centre left Panhellenic Socialist Movement (PASOK) to sweep to victory on a 43% majority, giving them 160 seats in the 300 parliament, enough for them to form a single party government.
But what does this mean for Greece, the economy and the property market.
I just dug out an article that PASOK leader George Papandreou wrote earlier this year, before the election was even announced.
He said that Greece must completely change its development model if it was to compete with emerging markets in Eastern Europe. He wants to put Greece at the forefront of the green generation to attract more foreign direct investment. He wrote:
"PASOK’s green development strategy is based on three central policy pillars: environmental protection and urban planning, energy, and transport. In order to promote sustainable development and eco-friendly businesses, we have designed a series of policies that include: subsidies and tax breaks for companies investing in environmental technology or renewable energy, shifting the tax burden to operations and products that are harmful to the environment, introducing sustainable construction standards for all public works, and improving the energy efficiency of all public buildings."
This was echoed in his first speech after the election, he said:
"We stand here united before the great responsibility which we undertake," he told cheering supporters in Athens.
He said PASOK had waged "a good fight to bring back hope and smiles on Greeks' faces... to change the country's course into one of law, justice, solidarity, green development and progress".
But in reality it was the 3 billion Euro stimulus package that really swayed the voters. However, one must worry if the stimulus is the right way to go with the international recession now easing, and the fact that Greece's second quarter growth means it has avoided recession so far. Thus by injecting a stimulus at this late stage, Papandreou joins the ranks of world leaders who now have a headache in trying to remove stimulating measures without stunting the recovery, in the great international game of Jenga.
As for the property market: property price growth coincides with economic growth, so if Papandreou can revive the economy then it is good news for the property market. It will also be interesting to see if his green policies materialise, the effect that they have on the economy and the property market; will green property development take off in Greece, and will green tourism increase are two questions that immediately spring to mind. Stay tuned on this blog as we watch the drama unfold.
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