WHEN it comes to defining a frightening overseas property market, a lack of mortgage finance, declining prices, chronic oversupply, relentless negative press coverage, government corruption and rock-bottom transactions volumes are sure to be the key ingredients.
Fortunately most countries in Europe no longer fit into all of the categories above. France and Italy seem relatively stable and even Bulgaria, which experienced some of the biggest price declines seems to be turning the corner.
As for Portugal, although a debt default now seems likely and an exit from the Euro is a possibility, sound planning laws and a relatively benign government have saved it from some of the worst effects of the crisis.
Spain on the other hand would seem to be a strong contender for this dubious honour. Prices are still falling in many areas, banks seem only willing to lend on their own stock and planning corruption trials are consistently in the news. Oversupply is also an issue in many popular holiday home destinations.
However even in Spain, things seem to be getting a little better. Actual sale prices in many areas have come down 30% to 40% to a level where agents are beginning to see transactions volumes returning.
Spain was always the largest overseas property market in Europe and there is pent-up demand waiting in the wings as prices begin to reach more realistic levels. There is also less chance of a sovereign debt default than in other countries on the periphery of Europe.
If there was a prize for the worst overseas property market in Europe, Cyprus would be the hands down winner.
Prices have fallen significantly but transaction volumes are still a trickle. The banks are in even more trouble than in most other countries as not only have huge real estate exposure but much of this exposure is in Greece.
Standard & Poors and Moody’s seem to be falling over themselves to downgrade Cypriot banks and this can only mean one thing: even tougher mortgage market conditions.
Furthermore, Cyprus is afflicted with a title deeds process which can at best be described as complex, slow and confusing and at worst has been described as fraudulent.
There have been many recent cases of banks repossessing properties from owners through no fault of their own. Unable to produce title deeds, the owners have been evicted when the managing developer defaulted on a loan the owner knew nothing about.
Business seems to be improving in many markets but even if things are not going as well as expected; it could be worse…..you could be selling in Cyprus.
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Eddie. Yes that’s the one per your link. The other helpful advice given to Graham Watson MEP was to ensure buyers sought seek legal advice!!! What a joke.
@Yianni. ‘Nobody can con you unless you let them’. Really? Like saying to a woman nobody can rape you unless you let them! As Nigel commented, it is certainly not the case that all those who have been conned, defrauded etc were feckless and negligent in their ‘due diligence’. If your supposedly competent, upright and independent Cyprus lawyer backs up the developer and the agent and tells you that it is normal to wait for up to 2 years (no mention of 7-15) for your title deeds and there is nothing to worry about, when in fact that lawyer knows full well he and the developer are telling you a pack of lies, how can the responsibility for the bad outcome be laid at the feet of the buyer?
There are limits to the checks that a buyer can reasonably be expected to make. The alternative is, as you say, never buy in a country where the deeds are not immediately available. Now that the nefarious practices of the Cyprus property market are known world-wide, that is exactly what the foreign punters are doing – NOT buying in Cyprus any more. A really brilliant marketing strategy surely – frighten away new customers!! No developer of any size can survive here without foreign buyers because the domestic base is too limited.
@Yianni – I have to agree with you that some people leave their brains on the aeroplane when they visit Cyprus and only have themselves to blame for the problems they get themselves into.
But there are many people who act responsibly and engage the services of a lawyer when buying property here, just as they would in the UK. However, some lawyers fail to carry out due diligence on behalf of their clients, while others work hand-in-hand with the developers.
Unless those attempting to buy property here have a law degree and an in-depth understanding of the Cyprus property laws (which are quite different to those of the UK) they will put their trust in these lawyers to represent their interests correctly.
Eddie, Kleftiko
Nobody can con you unless you let them. I heard one Englishman say, that Cypriots are generally good people but they simply cannot walk away from a fool and his money. I think this is very true and it sums it up nicely.
There are crooks and thieves everywhere, but if you do your due diligence it is very hard for them to con you. A lot of people left their brains on the airplane.
Buy a house without a title deed !!!! The biggest purchase of your life, and have NOTHING to state you own it!!! My God, the very thought makes my blood turn cold! And not just foreigners: Cypriots do it too. Sheer madness. Then they wonder why it all turns bad! What to do, we are only human I suppose.
@AndyP. I believe the Minister’s statements that you mention were variously quoted in a Risk Watch article in Financial Mirror of Feb 9-15 2011 by Dr Alan Waring. See Double Selling Fraud: the O’Dwyer Judgement, which was reproduced on this website.
I was pleased to read the bad news is spreading far and wide. I was set up by my lawyer and a well known developer in Paphos. I will certainly spread the word.
Don’t go on holiday in Cyprus and certainly don’t buy.
@Eddie – You forgot to mention that The Cyprus Interior Ministry also wrote to Europe a few years ago confirming that buyers were protected by their contracts. We all know what a blatant lie that was.
I have a copy of the letter somewhere if anyone wants it. I believe it was in response to an MEP question.
Yianni, Yianni,
Come on! You’ve not been following this very closely my friend.
Many buyers have been duped & lied too. Conned into signing contracts only to find out Title Deeds are not forth coming. When they try to back out of the deal, well the rest is history.
If you’re a Cypriot like me, then you should know the games being played in Cyprus.
Who needs to get re-elected when you have multiple pensions ?
@Yianni. Congrats. Your selling formula sounds sensible. To be sure, no one today would buy a property in Cyprus without title deeds. The reason that so many foreigners did a few years ago was basically because they were conned. They were systematically lied to by developers working in concert with dodgy lawyers, agents and the banks about (a) the complex, lengthy and uncertain deeds issuance process, (b) the existence of prior developer mortgages, and (c) the dire consequences for them of a+b.
What the developers and agents find hard to understand today is why buyers, especially foreign buyers, just will not listen any more to their honeyed words of reason that lack of a title deed is not a valid reason not to buy! Just see, for example, the article from Antonis Loizou on this website which makes the very argument that buyers are being unreasonable if they reject a property without title deeds – and look at the way he was well and truly kebabed by commentators for his cheek!
Either the market radically and urgently cleans up its act, in which case it should be possible for the Cyprus market to rehabilitate itself, or oblivion beckons the lot of ’em.
People will not buy new property in Cyprus now that they are aware of the Title Deeds trap. No Deeds = No sales.
Just sold my apartment after 2 months for slightly above my target price. There ARE buyers out there, mostly Cypriots and Russians, all fishing for a bargain. Price sensibly, be realistic and you will shift it. Those who do not have title deeds do not stand a chance. But why would you buy a property without a deed anyway ?
I’m amazed that the property market and the respective economies haven’t crashed even further in both north and south Cyprus. I’m appalled at how the banks are covering up their massive debts on mortgage lending and developers loans. They must be using a fictitious value for the property/developments they have loaned money on to show they are in credit. I doubt if the banks would survive if the truth were known. Whilst the laws and procedures governing property and ownership are so heavily biased against the interests and rights of the innocent buyer, then the market will decline further in my humble opinion.
Your report is almost very accurate – except prices have not come down significantly and most properties for sale are very overpriced – hence sales are down. If and when prices are actually reduced enough to reflect the true market conditions, then the Cyprus market will in time start to show some overdue positives.
Apart from this – your report was spot on and I am guessing the Cyprus damage limitation PR machine is DOA.
Great article. Thumbs up.
Maria Palmer, MAOM
Totally agree with the exception of the last six words.
You cannot sell in Cyprus with no title deeds.
And rightly so.
This also affects me but until the publicity of the corruption and fraud brings Cyprus to it’s knees we have no choice but to continue to spread the word even at our own expense. If we stop there will be no resolution to our problems. The lawyers, agents,bankers and developers will leave us stuffed and simply try and find new victims( I think this has been proven by the recent proposed legislation).
If we ensure that there are no more victims the problem will have to be solved by The Cyprus government.
It’s all CPAG’s fault – according to Loizou !
YES
Or the World – probably! With apologies to Carlsberg.