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Second largest price fall in EU

Residential property in Cyprus recorded the second largest price fall in the EU 28 and the biggest price fall in the Eurozone annually according to a Eurostat report published yesterday.

price fallsRESIDENTIAL property prices in Cyprus fell by 9.4% in the fourth quarter of 2013 compared to the corresponding period of 2012 according to a report published by Eurostat yesterday.

The report shows that the fall in prices accelerated as the end of the year approached, having fallen by 8% in the third quarter. (Eurostat employs a different methodology to assess price movements to that used by the Cyprus Central Bank).

On an annual basis, prices across the European Union fell by an average of 0.1%, while in the Eurozone they fell by an average of 1.4%.

The largest annual house prices falls in the European Union on an annual basis were recorded in Croatia (-14.4%), Cyprus (-9.4%) and Italy (-4.8%), while the highest increases were to be found in Estonia (+15.6%), Latvia (+7.9%) and Sweden (+7.0%).

For countries in the Eurozone, the largest annual price falls were reported in Cyprus (-9.4%), Italy (-4.8) and the Netherlands (-4.5%), while the highest increases were to be found in Estonia (+15.6%), Ireland (+6.3%) and Luxemburg (4.8%).

Further reading

Eurostat newsrelease 55/2014 – 10 April 2014

Readers' comments

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  • Chris Elliott says:

    Little Cyprus is no different to the other EU Countries that experienced a rapid increase in property prices led by Brits looking for a second home in the sun. Like Spain, Portugal to name a few Cyprus property prices will continue to fall once a flood of NPL properties are sold off by the so called Banks. As far as recovery in the Cyprus property market do not see that happening any time until they sort out the internal fiasco.

  • andyp says:

    @ Gavin Jones. Agreed. You can do as much due diligence as you are able but at the end of the day it is the lawyers responsibility and if you end up with a crook there is B A you can do.

    For example in my case

    Contract signed – No developer mortgage.
    Contract delayed and subsequently forged prior to registration – Oops developer mortgage.

  • B.Whiffen says:

    As a watcher of holiday/retirement home prices, this fall doesn’t surprise me in the least, all the time prices in other popular EU countries was falling Cypriot prices continued to rise mainly on the back of the Chinese and Russian home buyers, those looking for a holiday home [including some who already owned in Cyprus] started to move back to Spain and Portugal with the vast majority going to Turkey and Croatia.

    Add to this the now well known bent property industry on the island it is no wonder prices tumbled and still have further to fall, and will dramatically tumble if the banks decide to cut their losses and sell the housing stock they sit on as security for dubious loans that will never be repaid,

  • andyp says:

    The bottom line is that our lawyers did not do their jobs. Simples! And before anyone says otherwise the Supreme Court of Cyprus said as much in a ruling some years ago.

    The problem is getting justice for the failure of these lawyers. You cannot sue for compensation until you have actually lost something and so many have to wait to either lose their homes or be conned into paying their developer’s mortgage to get their deeds.

    Something else to remember is that it was only a few years ago that Cyprus lawyers had to take out indemnity insurance. How many did and how many did not?

    I do not believe in all this “rose tinted glasses” rubbish. Buyers are not lawyers and if they paid one to advise them then they should have been advised properly. Simples!

  • Gavin Jones says:

    Alan Waring.

    Agree with you wholeheartedly. It’s as trite and spurious to lay the reasons for the widespread wayward and corrupt practices of a country on its past history as it is to excuse a gangster for his many crimes on his deprived upbringing.

    The fact of the matter is that Cyprus is a rogue state with more than its fair share of rogue developers, lawyers and bankers. Add to that the condoning of their collective conspiracies by successive governments.

    I’m sure I don’t need to remind people that the majority of MPs in the Cypriot parliament are lawyers. Enough said.

    There are those who try and park the onus for the title deed scandal on unsuspecting real estate buyers for not having done their due diligence. Isn’t that what lawyers are there for?

    As for buying property in Cyprus, people would do well limiting their purchases to souvenirs at tourist gift shops. At least their health, wealth and sanity will be preserved.

  • Richard says:

    @Alan – I don’t want to beat this to death, but the overwhelming (99%+) of all information out there was positive – it really was.

    It would probably have taken half a dozen of you speaking on the BBC in peak times to counter-balance the tsunami of “invest in property before values are so high – you’ve missed the boat forever” messaging that was being pumped out everywhere 24-7. That message then obviously got seized on by the slimy low-lived element in order to skin a fast profit (as you point out).

    The key point I’m making is the need to focus far more on forward-thinking resolution rather than retrospective hindsight chiding.

    It’s ironic that I’m probably perceived as having a go at people like yourself – when really it’s the low-lived criminal scumbags who got us all into this mess who should be getting a really good hiding, their assets seized, their reputations trashed – and their DNA finger-print taking so they couldn’t pop up elsewhere on other occasions as ‘someone else’.

  • Alan Waring says:

    @Richard. Like Nigel, I too was publishing stark warning articles in Financial Mirror, the first being in 2004, a further 9 up to the end of 2010 and 6 subsequently. In addition, I threw in quite a few letters on the same subject published in Cyprus Mail. Then there was CPAG’s campaign which had huge impact from 2006 onwards. All in all, there really was an enormous amount of publicity about the dangers.

    @Mike. Cypriot culture may well be affected by its long history but to argue that deception and thievery is simply a product of invasion and external domination is nonsense. If there were such a cause-effect relationship then many and perhaps most countries could argue the same. The excessive corruption and fraud in the Cyprus property market comes down to sociopathic behaviour and uncontrolled greed of individuals who have choices – integrity or criminality?

  • Richard says:

    @Nigel – I’m aware you were warning people – and good on you for that – and what you’ve set up subsequently – but to keep banging on about what idiots we were (by implication) is NOT helpful!

    Back in 2005 – you would have been a lone voice of dissent – and as such – were not very visible I’m afraid. Probably a bit like a small number of journalists in Germany in the early 1930’s warning people that a certain despot probably wasn’t leading the German people to a good place!

    Steve’s sentiments resonate well with me – and I agree with everything but the “ah well”. As UK citizens buying in the Republic – as two E.U member states – you have a RIGHT to believe they will conform to the statute and spirit of the laws governing member states and that this mess should not, and must not happen again – EVER. Furthermore – redress needs to be made against those who have acted improperly – and compensation offered to those who have been conned – no matter how long it takes. It took the people who lost loved ones at Hillsborough over 20 years to get the police to finally admit they messed up.

    The more ah wells and admission it “was our fault” – the more this sort of corruption continues. I will NEVER admit it was our fault.

    We took the word of people who should have acted better on trust.

    They betrayed our trust

    THEY are in the wrong – not us!

    They will eventually have to pay – no matter how long it takes.

    Courage. Action. Stamina.

  • Mike says:

    As all the comments have shown the sector is in an unholy mess which has left a lot of people in an unforgivable predicament. For my part I do not believe the EU will prove to be of any help to anyone, I believe it will be proven to be toothless, self serving and will not interfere in any states internal affairs. Like the league of Nations it will show itself to be unfit for purpose at least in cases such as this. A sorry state of affairs for anyone involved.

    I recall a Cypriot developer having a sales drive in Cottons Hotel and Spa in Knutsford, Cheshire, UK some years ago and the salesmen were obviously attempting the hard sell and with one elderly couple. I wanted to intervene and warn them but my other half told me it was none of my business. I still wonder if they bought or not as what they were being told was far too good to be true and should have rung alarm bells. Sad, so very sad.

  • Steve says:

    @Nigel

    I think I fall into category 3 – independent lawyer, recommended by friends already living in Cyprus – no mortgage many visits to Cyprus, at all times of the year and over long periods, to Larnaca, Limassol and Paphos – witnessed friends being ripped off by unscrupulous builders, with houses falling down the hill or just falling down – bought books (unfortunately the wrong ones) on property purchase in Cyprus and took note of the recommendations.

    So why are we in this mess?

    1 We didn’t buy until Cyprus actually joined the EU (we signed in May, 2004), because we believed that Cyprus would have to behave like an EU member, more like the UK, particularly with respect to building regulations, property laws and consumer legislation. However, very little actually changed; it’s just been business as usual and every assumption made on the basis of EU regulations or what English people would expect have come to nothing.

    2 We were led down the garden path by developers’ and Estate Agents’ advertising and verbal statements that stressed how much like the UK the legal system for property was and the fact that so much English is spoken in Cyprus, together with the long-standing connections with the UK, all adding up to false reassurance. With hindsight, some of the advertising and contract wording was cleverly ambiguous, allowing an optimistic interpretation not borne out by subsequent events, but incredibly still believed by many expats, for example no liability for IPT.

    3 The first two led eventually to a major error of judgement. We bought off-plan, with a tiny note on the plans, in Greek, that they were subject to change at the developers discretion.

    ……Ah well.

  • Peter Davis says:

    For those with catch-up. Place in the sun. Channel BBC2 yesterday (12th April) was buying in Paphos Cyprus.

    The title deed problem was mentioned very quickly in one sentence, before moving on to other things like sun sea and friendly people. Hardly a problem?

  • @Richard – my website went on-line in 2004 was listed in Google’s top 10 and it still is – search for buying property in Cyprus.

    The first edition of my book was available on Amazon (and was Amazon’s best-selling e-book for a few weeks).

    The Daily Telegraph published a review in January 2005.

    So there was information out there (although not much I agree).

  • Richard says:

    @Nigel. Whilst your ‘three category’ classification may apply in some cases (and I’m not entirely disagreeing with you) – it’s a bit “hindsight rich” and lacks refinement over the picture that was property investment in the mid 2000’s.

    Let’s all cast our minds back to 2005-6. What was the picture regarding property investment then?

    Media: Bullish in the extreme. The Daily Telegraph actually endorsed our property broker (I wonder if they still would now)? The BBC was regularly running features on “property hotspots around the world” even on mainstream news bulletins!

    People: Every middle class person in Britain (or so it seemed) was “into” property. Dinner parties, lunchtime water cooler moments were full of conversation about where you were buying, thinking of buying, just bought, flying off to see, comparing one site with the other, doing up a second home – etc.

    Web: Where were the ‘doom-mongers’ in 2005? Who was posting up ON THE FIRST 2-3 PAGES of GOOGLE: “Don’t do this”, “Cyprus property rip off scams”, “Cyprus set to massively crash”,”Banks storing up dodgy loans” , Rubbish finance product duped into AAA rating?

    Where was all of the above? NOWHERE! Of course – we all know now the world’s financial systems were run by people who were gambling, snorting narcotics and visiting whore-houses at night on our money. We know many of the ‘venerable institutions’ with ‘impeccable credentials’ were fully aware of the deceit and the risk – but chose not to do anything about it. We know now that many of the slimy brokers were 100% aware they were screwing people hand over fist – but didn’t give a damn – they were too busy raking off big fat commission payments.

    It’s easy to be smug with hindsight Nigel – especially if you are unaffected. Many people (us included) took a very very VERY long time to get involved in risk like this – but we did it because the prevailing climate at the time was uber-positive and the risks were not EVER made apparent – hardly by anyone – to hardly anyone.

    So – we are in a position now – where the “powers that be” (power that’s increasingly trusted less and less) have a choice. They can either sit back and let criminals bankrupt thousands, or they can show some backbone and balls – and change the system and clean up the mess.

    I’m just so very, very, very sick and tired of being made to feel like a cretin. I’ll say it again – we are VICTIMS of a ghastly CRIMINAL conspiracy.

    When do we get heard????!!!!!!

  • Richard says:

    @Mike. I myself (along with thousands of others) might well agree that Cyprus has been victim to all sorts of atrocious actions in the past.

    Fact remains however – that conning thousands of people out of their life savings is a despicable, wicked crime and one that cannot go unpunished as a E.U member state. On top – what about the slimy UK brokers who knew full well what they were leading investors towards? Giving out advice they were neither qualified (nor insured & regulated) to do so.

    We must not even allow words like ‘legal’ into any discussion regarding the web of deceit that had been Cyprus based property by a large majority of the people involved in selling it. There is always a way out of any mess – it is just there is presently insufficient force being applied by too few people to make it happen.

    That’s now down to the victims to shout louder – MUCH louder!

  • James says:

    Nigel I hope so. Your views and comments on things I always take on board. Let’s hope most people come out of this situation with not too much distress.

  • @James – I’ve been following progress on the UK housing market – analysts are being pretty bullish with the number of sales reaching a six-year high last month.

    A report from RICS said that prices nationally are expected to rise by 5.9%/annum over the next five years.

  • James says:

    Nigel I did exactly what your first category states but in the UK market. Guess what, whopping amount of money lost. Just about now getting my head out of the sand and face reality. Learnt my lesson. My recovery will take time and patience.

  • @Mike – Thanks for your comments. In my experience those with issues regarding property they purchased all into three categories:

    1. Those who bought as an investment with the prospect of making a large profit/generating an income for their retirement. These people wanted to believe what they were being told and did little (if any) independent research and/or ignored advice not to buy.

    (Several people who I advised not to buy ignored me and went ahead and bought. As soon as they ran into problems they got in touch with me again seeking further advice!)

    2. Those who left their brains at the airport and who we swept away by the sun, the hospitality and the sweet-taking salesman.

    3. Those who did everything correctly. They engaged an independent lawyer, they made sure they could afford their loan repayments, etc. Some of these homes are uninhabitable due to damp and other problems resulting from jerry building. Others cannot get deeds because of planning infringements, unpaid developers mortgages, taxes and other debts.

    You may be surprised that those who have got in touch with me include doctors, dentists and even lawyers! All intelligent and well-educated people who were deceived and lied to by nefarious property developers and lawyers.

    It will be very interesting to see what happens with the Chinese. Having lived in the far east for a few years I can tell you that the Chinese are very astute – they’ve had more than 4,000 years to refine their techniques.

  • Peter says:

    Unless you buy a resale with Title deeds , you will be ripped off with the rest ..

  • angela kelly says:

    No matter how cheap the houses get, you still risk losing all your money if the developer goes bust. Only buy if you are a gambler!

  • Mike says:

    As much as I understand, appreciate and agree with the sentiments expressed we must never forget that some buyers were duped into purchase because of greed and the prospect of vast fast profits and gains. I venture to suggest that none would have considered purchasing property in their home countries without title and possibly thought that they could have one over those in a tiny little Island half state and reap the rewards. Wrong – these people have been forced to live under continuous occupation and oppression for thousands of years so are adept at all the con tricks known to man. I bet they could sell the British crown jewels to the Queen of England and to the Arabs and Russians at the same time and in the same room.

    I am not convinced the title deed mess can be solved as too many other factors are dependant on it, not least the value of collateral for loans held by banks and the prospect of having much of the population homeless. All in all an unholy mess – but legal.

  • Costas Afortune says:

    This once much loved little island is slowly imploding. Caused by greed of local Banks who have not been fulfilling a basic duty of care to it’s customers, greedy developers using underhand tactics to trick investors, corrupt lawyers who certainly have not looked after their clients interests and seem to work hand in hand with banks and developers, and certifying officers which have knowingly acted fraudulently but seem to get away with it.

    Overpriced properties that developers have lied to purchasers saying that the land was mortgage free yet it wasn’t, therefore still owing millions to the banks. The title deed fiasco. Thousands of people taking legal advice and going through the courts to get justice against the banks and developers. Protests up and down the country (GB) outside Alpha Bank in London, trade shows trying to sell properties, protests outside UK selling agents, having things appear in local and national newspapers, and even appearing on BBC which they claimed it “A £500 million property scam”!

    No wonder people/investors have fallen out of love with this once loved and respected island. No sensible person should touch this disaster area with a barge pole!

  • Pippa says:

    No one with any sense will buy a property in a country that makes it almost impossible for anyone to own any property they have paid in full for, where property developers have been allowed to use it as collateral for yet another loan.

    Fix the title deed fiasco and then perhaps the property market could have some chance to recover, but this seems to be beyond the capability of this banana republic.

  • Peter Davis says:

    Using my ‘Cypriot head’. Having depressed the market through stupidity I can then say. “Now is the time to buy look at all the bargains to be had”.

    A win win situation.

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