Residential property prices in towns and cities in Cyprus have fallen by more than 10% as the real estate downturn spreads beyond the prime tourist areas, according to local industry experts.
Lakis Tofarides, president on the Cyprus Land and Building Developers Association said that the global financial crisis has not only seen holiday home prices plummet but had a knock-on effect on the local housing market.
‘The price of a main residence in the centres of Nicosia, Larnaca, Limassol, Paphos and Famagusta has dropped by over 10% while prices of summer residences have fallen between 30 and 40%,’ he explained but added that land has retained its value.
He is hopeful that prices are reaching bottom and will not drop further. Stable land prices will help. ‘The value of land, which once represented 18% of the total value and now represents 45%, will not drop,’ he added.
The association is urging the government to do more to help first time buyers get on the property ladder. Although it has put €200 million into the organisation to help revive the housing sector, Tofarides said less than 50% of this money was being loaned because of the €40,000 a year income limit. He said the limit should be pushed up to around €60,000.
Meanwhile the Mediterranean island’s title deed fiasco rumbles on although there is more confidence that the government is committed to sorting it out. Indeed, Interior Minister Neocles Sylikiotis said last week that the failure to process a 130,000 title deeds snared in the system is affecting Cyprus’ reputation among foreign investors.
It is estimated that for every 10,000 title deeds still pending, the state loses a €100 million in lost revenue plus interest.
There is also a row brewing over the future of the Cyprus Property Price Index. A new official index from the Statistical Service of the Republic of Cyprus is imminent and MAP S. Plaits, which produces the current index will cease to do so.
Some industry insiders though are concerned about the role of the banks in preparing the index. George Mouskides, chairman of the Association for the Promotion of Property Developments said that the banks must not be the only providers of data.
‘A Property Price Index is a positive and useful tool. Provided it is accurate, it is a useful statistical tool for all those involved in the property sector. But it is worse to have an unsound PPI than not to have one at all. This is why the banks should approach this particular issue without agendas and ulterior motives if they really want to have positive results. Moreover, banks should not proceed alone with this. It is essential that the Land Registry be involved, not simply as a partner, but as a protagonist,’ he said.