THE DRAMATIC decline in the number of foreigners buying property in Cyprus is reflected in the latest Land Registry figures. These show that during the first nine months of 2009 property sales to non-Cypriots are down 76% compared to the same period last year.
Property developers and real estate agents sold more than 5,600 properties to foreigners during the first nine months of 2008, but sold a mere 1,363 during the first nine months of 2009.
In July the Interior Minister, Neoclis Sylikiotis, sent a reassuring message to property investors: “property investment is much safer in Cyprus than anywhere else,” he said, blaming adverse reports on the Title Deed situation in the foreign media for adding to the property markets’ woes. However it would appear that Minister Syliokotis’ message has done little to gain investor confidence.
The districts of Cyprus suffering most from the drop in foreign demand are Larnaca, where property sales are down 83%, and Limassol, where sales have fallen by 79%. The area least hit by the fall is Nicosia, but even there sales to non-Cypriots have dropped by 54%.
High interest rates are compounding the problem. Although interest rates for housing loans in Cyprus have come down, they are still amongst the highest in the euro area, at 5.53%, according to the European Central Bank.
Unrealistic asking prices are further exacerbating the situation. Even though some developers are offering 30% price reductions, they are finding buyers hard to come by.
The Royal Institute of Chartered Surveyors (RICS) anticipates that total property sales (i.e. sales to both Cypriots and non-Cypriots) this year will be more than 50% lower than any of the years 2001-2008. RICS Cyprus expects the year to end with total sales of around 7,900.