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Cyprus Property Blog by Cleo

Buying Property in Cyprus is a great investment choice and we discuss various aspects.

Is the Cyprus Property Market on the Road to Recovery?‏

Over the past few weeks I have been asked this question more times than any other - "How is the market?"  There seems to be the idea that recovery is just around the corner. There are no signs of recovery for sellers. There are sales; there will always be sales and if your next door neighbour sells his property and you hear of another sale near by that does not mean the market has turned it just means that someone sold their house. That's it.
Another question I was asked by a very optimistic client was how long will it take for the price of his property to return to where it was when he purchased it two years ago. The property in question is a 2 bedroom apartment purchased for 159,000 Euro and is currently listed for around 100,000. The answer to this question as well as many of my clients over the last two years have been dificult to deliver especially when you know that the person in front of you is looking at you for that glimmer of hope.  They are hoping that the property that they bought at the height of the market is not really such a bad investement. Unfortunatly, I am only able to tell it the way it is and the way I see it is the market is still sliding.
A couple other things happened - Cyprus joined the EU and the hype and excitment pushed prices so high due to high demand from Cypriots living overseas in the UK, Australia and the US in addition to other EU members. Many, many of these people bought right before and during the first year of EU accession in order not to "miss the boat" as I heard many say.  Mortgage lenders lent too freely and everyone got caught up in the mad rush of it all. But as my father- in-law kept saying "What goes up must come down" and that is surely what happened. It took longer than he predicted to fall but it has not just fallen but crashed. Prices now are where they should be, not low in my opinion. Some people doubled their money in a year!  The typical appreciation you can expect from a property is only about 5% and that is good!
The main thing that will bring the Cyprus property market back are outside forces that brought the market to a halt. As the global market began to stall so did Cyprus. When the UK market crashed, Cyprus quickly followed, so to know when changes will come to Cyprus is when you see change elsewhere. Many buyers have to sell their homes in the UK first in order to buy their retirement homes in Cyprus or make back the money they lost in stocks or from job loss or whatever else is happening during the crisis that limits spending. 
The Cyprus government and the CTO try to implement plans in order for buyers to regain confidence but like everything else it takes time (perhaps tomorrow!?) The US implemented an $8000 tax credit for first time home buyers. Despite harsh mortgage guidelines home sales are picking up in the US due to the tax credit, low prices and low interest rates. Cyprus needs to find a solution like the US has, but Cyprus needs incorporate and resolve the title deed problem and finally a resolution to the division of the island in order for many people to feel confident again. The day will come surely, but no one can predict when. If I have to predict, I would say we will see the road to recovery by the end of 2010 
Cyprus has a lot of room for development, change and enormous potential. Cyprus has everything for those who like the slow pace lifestyle and the ability to take you away from it all for those who want to just get-a-away. 

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Published Wednesday, June 24, 2009 9:19 PM by Cleo Shahateet
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daveyboy said:

Apartment bought for 159k euro now on the market for 100k euro? hmm not what I see in regular searches of property in the southern republic.

Purchased a small resale detached in the spring  of 2008 at 165k. Comparative properties new now over  200k +. Yes I know off plan pices are higher due to vat and higher selling commissions but  after viewing literally hundreds of properties I know I could not now get anything like the property I have at the price I paid. Realise prices are the "asking" prices but was I just lucky?

Looking ahead a few years post economic downturn confident that the hundreds of purchasers wanting to buy in Cyprus will enter the marked and gradual, gentle price inceases will return sometime in 2010/2011 for the five to seven years thereafter.

If you can, buy now!!

daveyboy

June 30, 2009 5:49 PM
 

Cleo Shahateet said:

There are and have been deals on resales due to the crisis and people needing money so selling at very low prices. I don't know what your property is, but yes, you may have gotten lucky as have many on resales but there are more than that which lost a lot when they bought at the height of the market. Prices on internet searchs are not really reflective of what prices really are since a value is only what a property can actually be sold for and many homes have been on the market for up to or even more than 3 years!! Offers are generally coming in much lower than asking price unless the property is priced very competitively.

Prices will return to what they once were but slowly and not soon. There is no come back yet despite a few more sales. It is just lower prices and buyers taking advantage of it - like you said "buying now."  It is a buyers market and will be for awhile.  

June 30, 2009 9:20 PM

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Cyprus Property is Hot! Now more than ever. There are over 20 million northern Europeans (European baby boomers) that have retired in the last few years which is a great number and many will be British. Many have been waiting for the financial crisis to past before they make the move to Cyprus. With warm weather, low crime rate, low cost of living in Cyprus and English speaking population, do you think Cyprus will have enough properties for every one?

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