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New Cyprus Property

Market trend in Eastern Cyprus Mid 2009

 

The views of Andrew Creswell Director of J A F Marketing Ltd.

 

During the first seven months of 2009 Cyprus has seen a decline in property sales compared to sales in 2008.  The decline has been due to factors relating to the exchange rate of UK pound to euro making property prices in Cyprus more expensive for UK buyers as a result of the worldwide economic crisis.  Cyprus was one of the European countries with rising property sales during 2005 to 2007 and we saw the huge growth become more static in 2008 and then decline over recent months. 

 

Despite the decline, Cyprus is not a market where there is a mass of distressed sales, local attitudes tend to be one of holding on for better times rather than respond to a lower demand immediately. Cyprus is not being pushed by banks forcing sales and so we do not see reduced prices at this time because of this. The economic situation in Cyprus is better than most European countries, interest rates are going down for the local population and there is a feeling that things will improve by mid year 2010. There is then still an air of confidence that will again encourage people to hold on to their properties.

 

The resale market is a mix of residents selling up to maybe downsize or return to the UK, and owners of holiday homes who are selling to capitalize on their investments and take the money back.  Here is where you may find a resale bargain, the lower demand and move to resales has seen a reduction in sales prices due to the flip side of the coin when it comes to the exchange rate. For those owners who bought prior to Cyprus going into the Euro, the current exchange rate of euro to UK pound is actually very favorable to them. Many are able to still make a return on their capital employed and to present a good saving to buyers. For example, if you bought a property for 50,000 Cyprus pounds, prior to going into the Euro, it would have cost around 60,000 UK pounds.  When we went in the Euro that property value would have then been around 85,000 euro which at today’s exchange rate is 72,000 UK pounds. So in UK pounds there is a return of 12,000 UK pounds, as such there is more room to negotiate on the prices where the owners are returning their funds to the UK.

 

For buyers who bought in Euro or who are investing their Euro back in a European country with this currency, there is less room to maneuver and they are tending to hold on, or to sell at cost.

 

For new and off-plan properties, developers with a portfolio of key ready properties and nearly complete properties are showing price reductions but only one developer (in the Paphos region) is showing reductions of 30% on their portfolio – which remains as mostly apartments.  For future projects there is more caution from the developers as to their building and delivery dates and most are riding the storm and awaiting better times and have not reverted to distressed sales at all.

 

In summary, it is possible to find a resale bargain, and maybe a key ready bargain, but Cyprus is definitely not a depressed market.  On the contrary Cyprus is in a strong position with its economy and still holds key factors for anyone looking to live here, whilst consumer goods may be on a par or more expensive than in the UK, the services and rental property prices are much less than in the UK and the tax regime on pensions and such still make it a very attractive option for people planning a home overseas.

 

We would expect to see a return of more buyers by mid 2010 we anticipate the house prices stabilizing, now is definitely a good time to buy, potential buyers should not hold on with the belief that prices will drop further, as it stands at present this is unlikely to be the case. Look for a bargain now.

 

In terms of what kind of property to invest in, well it depends upon peoples budget, if your budget is an apartment – then the best thing to look for is the location, this remains the most important factor and buying at reduced prices when the location is not so good may not give you the return you are looking for on your investment. Location is similarly important for investors of houses and villas, but it really depends upon the individual and purpose for buying as to what suits them.  Certainly we are seeing now a more discerning buyer, often not wanting to be on a tight development project of a number of houses and villas but preferring something a little more private.

 

We are also seeing buyers who are still looking at Cyprus as their dream for retirement in a few years time, these buyers are looking at land prices and locations and considering custom build villas and houses as the best option, or they are looking for a resale property that was built in a larger plot of land and has potential for renovation.  Land prices have held their value in the main part, there are some reduced prices on agricultural land which was becoming quite expensive but other than this Land prices have not changed much.

 

Lifestyle in Cyprus has changed since joining the Euro currency. As a consequence of the exchange rate applied of Cyprus pounds to Euro at 0.585274, Cyprus has now become quite expensive for consumables. Many residents and tourists who depend upon their UK pounds converted see two hits, one the lower exchange rate UK pound to euro and two, the higher cost of goods.  For example, a cup of coffee priced 1.50 Cyprus pounds converted to 2.56 euro – at today’s exchange rate this means it costs 2.20 UK pounds and before the Euro it would have been about 1.80 UK pounds, it’s about 20 to 22% more expensive.  

 

This said, Cyprus does not have the high annual taxation, has lower property rental prices, pays just a fraction of water charges and council taxes and other services like road fund license etc are a lot less than the UK.

 

When you put it all in the melting pot, and then weigh up the weather and laid back lifestyle with very little crime, Cyprus is still a good option for a home overseas and a reason to invest in the property market on an island with finite land to build upon. Demand will grow as the worlds populations seek nice places to live.

 

For more information please see our web site at http://www.cyprus-property.co.uk  

 

www.Cyprus-property.co.uk has been offering a tailor made Free service for 8 years to anyone looking for property in Cyprus. Dealing only with licensed reputable associates. We are you one stop shop for property in Cyprus be it just information or after you have bought, we have many satisfied clients in 8 years see the testimonials at our web sitehttp://www.cyprus-property.co.uk/File/testimonials.asp

 

© Andrew Creswell