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Property sales plunge to new depths

The number of properties sold in Cyprus in July plunged to new depths, with the number of contracts of sale deposited at Land Registry offices down more than 30 percent compared to July 2011.

PROPERTY sales in Cyprus during July fell to their lowest level since we started keeping records in 2006. During the month, a total of 408 contracts for the purchase of property were deposited at Land Registry offices compared with the 605 deposited in July 2011; a fall of 33%.

Of those 408 contracts, which include the purchase of residential & commercial properties and land, 69 (27%) were in favour of overseas buyers and 339 (63%) were in favour of Cypriot buyers.

Domestic sales

Overall 144 fewer properties were sold in July, a fall of 30% compared with July 2011. Sales in Nicosia fell by 65 (-45%), in Limassol they fell by 55 (-37%) and in Famagusta they fell by 30 (-44%).

On a more positive note, 4 more properties were sold in Larnaca and 2 more were sold in Paphos compared with July 2011.

In the first seven months of 2012 sales to the domestic market stood at 3,249 compared with 3,084 in the same period last year; an increase of 165 (5%).

As reported by Pavlos Loizou MRICS in his commentary on the RICS Cyprus Property Price Index that we published yesterday “The first half of 2012 saw investors postpone their decision making and look for safe havens. Property, both commercial and residential, was increasingly viewed as a risky asset and one with negative prospects in the near to medium term.

“This led to a reduction in interest from both local and overseas buyers, resulting in low transaction turnover. Local buyers in particular were the most discerning as the increase in unemployment and the worsening prospects of the local economy led to a sharp reduction in interest.”

Source: Department of Lands and Surveys

Overseas sales

The overseas market continues to deteriorate, with the number of sales dropping in all areas once again during July (despite the alleged interest being shown by Chinese buyers).

The hardest hit area was Nicosia, where sales were down 13 (-68%) compared with July last year. Nicosia was followed by Limassol -12 (-41%), Famagusta -11 (-55%), Larnaca -8 (-32%) and finally Paphos -9 (-31%).

During the first seven months of 2012, sales to the overseas market stood at 869 – a decrease of 21% on the 1,098 sales in the same period last year; a fall of 229 (-21%).

Cyprus property sales - overseas market - jul12

Source: Department of Lands and Surveys

Once dominated by buyers from the UK, the island’s overseas property market collapsed in 2009 and is unlikely to fully recover in the foreseeable future. The collapse has resulted in thousands of unsold holiday homes and apartments littering the island and property developers slashing prices in efforts to offload their unsold stock.

The collapse was a consequence of the global financial turmoil and the Title Deed scandals. The Title Deeds-cum-fraud mess, in which buyers found themselves being duped and mislead by the ‘crooks’ masquerading as ‘honest’ property developers and lawyers, has resulted in many potential overseas investors looking at safer places for their money.

In spite of some half-hearted attempts by the government to resolve the Title Deed fiasco there remain thousands buyers (both Cypriot and foreign) who although having paid for their properties in full do not have legal ownership.

Some of these buyers now face the very real threat of losing their homes as developers who mortgaged the land on which they were building, without the knowledge of the buyer, have collapsed – and the banks are looking to recover the debt.

Having exhausted local legal remedies in efforts to save their homes, buyers have taken their cases to the European Court of Human Rights. These have been accepted and will be heard in the coming months.

Readers' comments

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  • @Curmudgeon – I was speaking with a Cypriot friend the other day who is in his early 60s. He is only too pleased that the troika are shaking things up as this will help/force Cyprus into changing its banking system and their public services.

    I don’t know if you were around when much of the UK Civil Service was privatised in efforts to improve performance and efficiency. Of course the public service unions resisted and it wasn’t that long ago that a job in the Civil Service was considered a job for life.

    All that has changed now and it’s only a matter of time before Cyprus changes – and I hope it’s sooner rather than later.

  • Curmudgeon says:

    We all know about the Title Deeds issues and most clamour for them to be issued at the point of sale however, there is no hope as long as the existing system and people are in place.

    Cyprus needs to change and scrap the present system. It also needs a strong management to be rid of the deadwood. Based on present performance it just doesn’t have that, that je ne sais quoi so whatever is required will have to be bought in…….can’t see that happening, nothing to do with being bankrupt, simply the Cypriot will not accept it.

    Note I say scrap the present system, not change it. Change could be misconstrued as tinker, tweak or modify and that is just not acceptable.

    For too long the title deed system has been tweaked to suit whatever problem the government thinks should be adjusted to suit their means. The net result is something that is disjointed and from where I stand, unmanageable and dare I suggest untenable.

    So, Cyprus needs to change and that is the problem in a nutshell it cannot. To tell them their system is at fault and suggesting ways of bringing about improvements makes them dig in further (often referred to as denial). It also insults them, they do not like being told their system is wrong.

    You have to get inside their minds to bring about change as well as lobby the younger voter to oust the deadwood in government. Every young Cypriot I’ve spoken to about voting says they don’t vote quote ‘it’s a waste of time’.

    Regarding getting inside a minds I will leave for the psychoanalysts.

    Oh yes one last thing, Cyprus is ripe for Spitting Image! Bring it on!

  • Costas Apacket says:

    With so little new sales activity for the staff to process within the District Lands and Planning Offices, I’m sure that we’re now in for a very exciting golden period where there will be a massive effort to reduce the backlog of Title Deeds that remain unissued.

    Oh look, did you see that flying moufflon up there?

  • Janner says:

    Jim is right. It sounds so simple (title at point of sale) but is clearly so difficult for the Cypriot authorities. I understand that to do this would cause considerable distress to a very creaking if not broken system. But I cannot see an alternative. Without that clear title at point of sale the ‘system’ is doomed. If something is that broken, you have start to again.

  • Jim says:

    So much for the Chinese effect. The wishful thinking developers have spent more on advertising than they will ever get from the Chinese.

    The property market in Cyprus is in a critical condition & will stay that way, until the government ensure a clean title deed is available when payment is made.

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