Slight improvement for Cyprus real estate market but economists predict 4% fall in prices in 2010
The property market in Cyprus appears to be stabilising but economists are still expecting values to fall another 4% in 2010 on top of the 8% decline in 2009
Although values and transactions and permits for building are slowly increasing there is still very much subdued interest from buyers on both a domestic and foreign level.
Many experts believe that without a new influx of foreign investment a real estate recovery is unlikely this year. One problem is that property is often too expensive for local buyers and foreigners are put off by headlines about the country’s title deed problems which have still to be resolved.
The latest figures from the Department of Lands and Surveys show that 803 contracts of sale were deposited throughout Cyprus during May, the highest number since July 2009, but still way below peak and overall sales this year are still down by more than 60% on the numbers sold during the same period in 2008.
Although there are tentative signs of interest from foreign buyers with the number of contracts up 7% on 2009, this again is well below peak.
Nicosia has seen sales to non-Cypriots up by 92% this year and Famagusta has seen foreign sales up 10% but in other coastal towns, which are largely dependent on external demand, sales are down. Limassol has seen a 6% fall, in Larnaca sales are down by 4% and in Paphos they are down by 3% compared to last year.
Meanwhile figures from the Cyprus Statistical Service show that building permits were up 27% in March this year compared with the same month in 2009, a sign that developers are certainly looking to increase supply. The majority of these are for residential buildings.
In its June economic bulletin the Central Bank of Cyprus estimates that the price of residential property will fall by 4% in 2010 based on property valuations and other figures in April 2010.
It points out that although activity in the domestic property sector during the first four moths of the year appeared to be stabilising, the general climate is restrained and interest being shown by both Cypriots and non-Cypriots in buying housing is still low.