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.