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Nightmare slump in sales continues

Less than three weeks after Cyprus was hailed as the world’s weakest housing market, the nightmare slump in property sales continues according to the latest figures from the Land Registry.

LATEST figures from the Department of Lands and Surveys reveal that a total of 285 contracts for the sale of property were deposited at Land Registry offices across the island in September compared with the 442 deposited in September 2012; a fall of 36% from last year’s low levels.

Of those 285 contracts, 73% (208) were deposited on behalf of domestic buyers, while 27% (77) were deposited in favour of overseas buyers.

September’s slump in sales was attributable to a 43% drop in domestic demand; overseas demand remained unchanged from last year.

Sales fell in all districts, with Paphos being the hardest hit with sales dropping by 56%. Sales in Famagusta fell by 44%, those in Larnaca by 36%, while sales in Nicosia and Limassol fell by 18% and 9% respectively.

Cyprus property sales (total)total

During the first nine months of 2013, total sales are down 45% compared to the same period last year having fallen from 4,876 to 2,634.

Pundits predict that the property market will continue to operate at very low levels due to the lack of liquidity and uncertainty about the future. And as we reported yesterday, Moody’s believes that the Cypriot banks may require a further €1.5 billion on top of the €2.5 billion already allocated as the value of assets [mainly real estate] deteriorate amid the severe recession.

Domestic sales

Domestic sales during September were down 43% compared with September last year, having fallen to 208 from 365; sales were down in all districts.

Paphos was the hardest hit with sales dropping by a whopping 76%. Sales in Larnaca fell by 40%, those in Famagusta by 31%, while sales in Nicosia and Limassol fell by 20% and 13% respectively.

Cyprus property sales (domestic)

During the first nine months of 2013, domestic sales have slumped 49% compared to the same period last year having fallen from 3,846 to 1,947.

Overseas sales

Sales to the overseas market remained the same in September as September 2012, with 77 properties being sold.

Although sales in Famagusta and Larnaca fell by 75% and 10% respectively, sales in Paphos and Limassol increased by 25% and 12% respectively, while sales in Nicosia remained at the same level as last year.

Cyprus property sales (overseas)

We understand that the increased sales in Paphos and Limassol are mainly as a result of Chinese nationals buying residential properties costing more than €300,000 to secure visas and also Arabs who are fleeing the upheavals in their countries.

During the first nine months of 2013, property sales to the overseas market have slumped 28% compared to the same period last year having dropped from 1030 to 737.

The rise and fall of the real estate market

AT THE start of the 21st century property sales began to increase as more overseas investors were attracted to the island once its accession to the European Union had been confirmed.

The increased demand resulted in higher prices – particularly in the price of land, which rocketed making the purchase of a home unaffordable for many domestic buyers. Domestic sales peaked in 2004 and have fallen from nearly 12,000 to less than 2,000 in the first nine months of this year.

Sales to the overseas (mainly British) market flourished with more than 11,000 being sold 2007. But the economic downturn in the UK together with the Title Deed-cum-fraud mess resulted in a collapse in sales which, apart from a ‘dead cat bounce’ in 2010, continues to this day with just 737 properties being sold to non-Cypriots during the first nine months of 2013.

Cyprus property sales since 2000

Although the previous government introduced a new Specific Performance law to provide additional protection to those buying property, the new law has done nothing to inspire confidence in the market.

And perhaps not surprisingly, a statement in 2009 by the former Interior Minister Neoclis Sylikiotis that “property investment is much safer in Cyprus than anywhere else” fell on deaf ears.

The figures above show that the Cyprus government and the island’s real estate sector have to do much, much more before the property industry can haul itself out of the abyss of its own making.

Readers' comments

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  • Janner says:

    The Cypriot government clearly and undeniably do not want to deal with this issue. The troika have set a target in relation to title deeds which will not be met. The question is; What will the troika do about non-compliance.

  • souzie says:

    It is imperative that the Land Registry records all easements, covenants and charges against all properties, thereby affording prospective purchasers the opportunity to make proper searches and should not permit sales to proceed without the presence of valid title deeds.

  • Aggis Demetriou says:

    Why should anybody buy a property without title at point of sale, I’m a developer and I advise clients to buy properties in the UK and rent in Cyprus.

    Everybody is quick to blame developers for this mess, I can tell you I built over 100 units, to give you an example I built a small development of 9 houses, Yes I sold them, I’m trying to get final approval from the authorities (for the last 7 years) but can’t as 8 of the buyers decided to build extra rooms to their houses and all covered the car ports and also stuck various built sheds, so now nobody wants to remove the additions, so in my case everybody looses out, we will never get titles and the government wont get its 200K in registration fees.

    This can all be averted if building control carries out inspections at the same time the properties are being built just like in the UK.

    So know after investing over 19 million euros here on this crippled island I have chosen to leave in the new year, I don’t believe the troikans can sort out this mess unless they decide to close the whole system down and start fresh, the governments staff in these offices should be removed, the system they have just don’t work, perhaps it worked many years ago but not in today’s world. There is 2 technical inspectors who inspects properties for final approval for the whole of Limassol, it will taken an estimated guess of about 200 years to inspect all the properties.

    Anybody with half a brain would simply leave and let the banks take your properties/loans after all they carried out a valuation at your cost before they handed you the loan.

    And don’t forget its a sweet short life we all have.

  • Curmudgen says:

    All of us here know the problem but how does one get it over to the Cypriot nation? The Cypriot in the street is still looking for an upturn of foreign buyers simply as he does not understand the real reason behind the collapse.

    They truly lack the common sense to put two and two together and still blame, yes blame us expats for publicising the bad news abroad. As one taverna owner recently said ‘all the bad publicity that we (expats) have given the island has brought it down’. Typically in denial – it must be a rouge gene…and don’t blame me, I only came here in 2009.

  • Pippa says:

    Colin B – Your more than welcome!!!!

  • Colin B says:

    Thanks Pippa, you saved me a lot of typing!

  • Whirlybird Rtd says:

    It would be good if the government officials could not use the spare time that is lost in sales to ease the pressure on the poor overworked registry department by helping out with title deeds etc?

  • @Mike – Another explanation for sales to overseas buyers remaining the same as last year is that the buyers, who seem to be Chinese and Arab, probably don’t have any knowledge or understanding of the problems and are being ‘scammed’.

    See last Sunday’s article.

  • steve says:

    Well said Pippa

    The most upsetting part about the whole thing is that Cyprus is a beautiful island and if the government got its act together regarding title deeds etc then people would flock to the place. The government is holding a golden egg in its hand but they cannot see it. With property price being at an all time low there are people who are willing to part with their money and pick up a bargain. With all the uncertainty these people are picking up bargains in Spain and other surrounding islands.

    I would not hesitate to reinvest in Cyprus if things were sorted out.

  • Mike says:

    Pippa, as much as I agree with your sentiments it appears the sales to overseas buyers, Island wide, remains at the same levels as in September 2012 so the issues of title deeds, developer loans etc. would, on the face of it, appear to be unheeded or of no real significance to a buyer from overseas.

    Puzzling I know but indicated in the report. I don’t understand it either but I do wonder if repatriating Cypriots who only wish to have title to the land any house is built on might explain it. Having title to the house would presumably incur immovable property and municipality taxes at a far greater level than that for the land alone. Just a thought but it is not uncommon.

  • Costas Afortune says:

    Is anyone surprised at this? The internet is littered with bad press about people’s nightmares in Cyprus. Allegations of lies and deceit from Cypriot banks, developers, lawyers etc will continue to cripple this island until the Cypriot government step in and get people to hold there hand up and accept some blame.

    Buyers are told not to worry as the law system in Cyprus is based on and very similar to British law, when really it couldn’t be further away from the truth.

    Property shows in Britain have been protesting against Cypriot sales which must have dented the market, Cypriot banks are being taken to court by thousands of investors, developers continue to play god and flout laws simply because they have in the past. Even Cypriot lawyers have been named in court proceedings for not acting in clients best interests.

    Many investors have complained to MPs, newspapers, etc and are awaiting the outcome of cases. Even the Cypriot Bar has been inundated with complaints regarding Cypriot lawyers but nothing seems to get upheld.

    This once friendly and loved island has had its backbone ripped out by developers, banks and lawyers trying to make money by not playing by the rules. You only have to look at Bar Street in Paphos to see the island is slowly closing to tourists which will put yet another nail in the coffin of Cyprus.

    Buyers beware, your dream investment will most likely turn into Your Worst Nightmare if you buy in Cyprus! Don’t Do It.

  • Peter says:

    With a government that thieves your money out of your Bank account, what does the country expect. My wife and I were going to buy a villa in Cyprus and retire there, not any more. I would not even buy a Tent there now and certainly would not put any money in any bank there. Nobody would in their right mind.

  • Pippa says:

    And is anyone surprised? Until the nightmare of the lack of Title Deeds, developers loans and banks either threatening to repossess property paid for in full, or expecting the property occupiers (would be owners if they had title deeds) to pay developers debts then the property markets will go down and down. I see little or no hope for the Cyprus property markets for years to come.

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