In a recent interview with StockWatch the Land Registry manager, Andreas Christodoulou, advised Cyprus property investors to expect a lower return on their investments as the market has entered a period of recession.
In his interview, he said that property prices will stabilize in the next four years – then they will recover but at a slower pace, as prices neared those of the competitive European markets.
Mr Christodoulou noted that demand in the property market has fallen by an average of 40%, the highest drop of 50% being recorded in Famagusta and the lowest in Nicosia and Limassol, where it has dropped by 12%. This mostly affects houses and apartments in seaside areas. But Mr Christodoulou added that “The demand for plots remains stable“.
Mr Christodoulou considers that “Despite the lower demand, property prices remain stable. As Land Registry we don’t expect a decrease in prices, but if there is one – as a result of the credit crunch – it will be low“.
According to the Cyprus Central Bank data, the price of housing properties grew by 15% in 2007 compared to 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003. Although there are no official figures for 2008, a recent StockWatch survey gave the impression that market prices have dropped.
“What developers do is to reduce their profit, making several offers. When they sell, for example, a apartment, they either reduce their profits or offer housing equipment of £2-3 thousand. But they never say that they will reduce prices from £100 thousand to £90 thousand“, he stressed.
Mr. Christodoulou believes that the market will recover in 3-4 years.
“When the market recovers, the price increases will not be serious. As the years go by, we will approach the prices of other European countries“, he noted.