Cyprus has become more popular with would be overseas buyers searching for property at a time when prices are expected to fall considerably due to the Mediterranean island’s deteriorating economic outlook. ‘The recent news coverage of the economic woes in Cyprus led to an increase in searches for the island, overtaking Ireland as our seventh most popular destination,’ said Shameem Golamy, head of Rightmove Overseas.
The property market in Cyprus has seen prices fall since the global economic downturn started in 2007 and the current crisis is expected to be another blow to the market but this is expected to increase interest from long term investors seeking bargain prices. According to the latest index from the Royal Institution of Chartered Surveyors (RICS) prices were already falling before the banking crisis struck.
This index has recorded significant falls across Cyprus’ major urban areas, with prices and rents falling across all districts in the fourth quarter of 2012. Overall, Nicosia and Limassol fared the worst as they were the least affected markets up until the second half of 2012. Overall prices for both houses and apartments fell by 1.1% and 3.1% respectively, with the biggest drop being in Famagusta, where apartment prices fell 7%, and Limassol where house prices fell by 2.5%. If we compare data to the fourth quarter of 2011, prices dropped by 7.9% for apartments and 5.7% for houses.
It was thought that areas which had dropped the most early on in the property cycle were now nearing the trough, but the current banking crisis means that more falls in prices seem inevitable. ‘Property, both commercial and residential, is viewed as a risky asset and one with negative prospects in the near to medium term. Local buyers in particular were the most discerning as the increase in unemployment and the worsening prospects of the local economy led to a sharp reduction in interest,’ the RICS index report says.
Quote from PropertyCommunity.com : “PROPERTY valuers in Cyprus have suspended work as they come to terms with a financial bailout that is likely to deepen the price falls of recent years, the chairman of the country’s Property Valuers Association told Reuters.”
The latest figures from the Land Registry offices in Cyprus also show a sharp decline in sales and prices. The number of properties sold in March fell to the lowest monthly figure since records began, down 49% compared with March 2012. There may be increased interest from overseas buyers but this does not yet seem to be translating into sales. In March of the 286 properties sold 75% were to local buyers and 25% to overseas buyers. Sales to overseas buyers have fallen by 49% compared with March 2012, the figures also show.
Sales increased 16% in Paphos, the only place in Cyprus to see a rise although the actual number of transactions were tiny, just 44. Elsewhere sales fell dramatically, down 79% in Famagusta, down 74% in Limassol, down 48% in Nicosia and down 31% in Larnaca.