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External property demand tumbles 80%

First Published: 04/06/2009 06:55:24


The drop in external demand of properties in the first five months of the year neared 80%. Part of the real estate agents believe that they do not expect a full recovery before 2012.

The decline in external demand is reflected in the latest Land Registry data. The deeds of sale by non-Cypriots in January – May show that all municipalities face the same problem, with the number of unsold flats and houses becoming bigger and bigger.

Things in Limassol are slightly better; however, demand in the area is down 64% since only 167 properties were sold during the period against 468 in 2008.

In Nicosia, the annual drop reached 72% and in Paphos 79%. Sales in the capital fell to 61 from 215 in the first five months of 2008 and in Paphos to 228 from 1086 in 2008.

Paphos was affected earlier than the other municipalities and therefore the drop in demand is lower.

Real estate agents and developers said that some of the sales in Paphos are the result of transactions made by foreigners themselves, pushing prices to exceptionally low levels in order to sell and take advantage of the exchange rate between the sterling and the euro.

The gap in external demand is bigger in Larnaca and Famagusta, which largely depend on external demand.

In Famagusta, only 78 properties were sold during the period (2008: 582), while in Larnaca 112 (2008: 788).

Total sales during the period slumped to 646 from 3139 in the first five months of 2008.

Real Estate Agents Honourary Chairman, Elias Danos believes that pre-crisis prices will not return.

Mr. Danos said that the property market in 2007 and 2008 was a “bubble as a result of the capital of €3 billion injected in the Cypriot market after the approval of the amnesty by the Parliament. This led to an abnormal increase in property prices, which instead of increasing around 10% per annum, they increased by 50% each yearâ€, he said.


Recovery in property market to take longer

First Published: 03/06/2009 06:45:27


The activity in the property market stood still in May, with the property circles stressing that despite the slight recovery in the past few months, worse days are on their way. The figures released by the Land Registry yesterday show that the total annual decrease in sales in the first five months of 2009 stood at 61%, reflecting the rough times that the property market goes through.

According to the deeds of sale, the drop in the volume of sales in May showed a slight recovery and amounted to 53% against 55% in April, 56% in March, 65% in February and 72% in January.

Despite the slight increase in sales, Chairman of Land Developers Association, Lakis Tofarides told StockWatch that optimism is not allowed. “The property market is in recession and the differentiations in the deeds of sale are attributable to seasonality. Mr. Tofarides criticized the government for not taking seriously the social and economic risk from the recession in the property market.

“It is wrong to give the impression that today we sell and tomorrow we don’t. The recession in sales was anticipated. However, the problem in the property market is seriousâ€, he noted.

Similarly, property valuator, Antonis Loizou said that price fluctuations are attributable to the limited number of sales by the Cypriots, who grasped good opportunities (constructions in good condition and in good price).

“The situation is still dramatic. The size of the problem will be apparent after September with thousands unsold flats and housesâ€, he said.

Other real estate agents are more optimistic, since Cypriots are now more interested in buying houses. Chairman of Nicosia Real Estate Agents and Vice Chairman of the Pancyprian Association of Real Estate Agents, Costas Kadis, stressed that the purchasing power in Nicosia and Limassol has been reheated.

For the time being, however, sales concern flats and houses in Protaras. “They were sold 30% lower than the price in 2007â€, he said.

The freezing in the property market is reflected in the historic data. In 2009, total sales stood at 2,838, in 2008 at 7,224, in 2007 at 8,318 and in 2006 at 6,486.

Stagnation in the property market is seen via the figures concerning each district separately. In Nicosia, sales tumbled 55% to 770 from 1,702 in 2008.

In Limassol, where the purchasing power is supported by the Russians, sales slumped 54% to 716 from 1,541.

Similarly in Larnaca, which depends on external market, the sales in the first five months of the year dropped 63% to 542 from 1,464, while in Famagusta they declined 71% to 277 from 957.

Finally, sales in Paphos were 66% lower to 533 from 1,560 in the corresponding period of 2008.

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To be expected - did anyone think the Cyprus bubble would be any different to any other?

Particularly as they rely so heavily on Brits to buy those identikit whitewash villas! ;)

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