The latest increase in property prices is beyond forecasts. According to the new study of the Cyprus Real Estate Agents Association to be published in the next few days, the increase in plot prices in the domestic market will exceed 20% in 2007.
The study, which concerns the first half of 2007, shows a slowdown in the offer of housing plots and an increasing demand. “This pushes prices sharply up and we expect that increases will exceed 20%. This is a surprise“, Chairman of the Association, Solomon Kourouklides told StockWatch.
The land valuators seem to agree. Vice Chairman of their Association, Charalambos Petrides anticipates that plot prices will increase by 15% – 25% in 2007.
The boom in the property market is also depicted in the state revenues from the capital gains tax. According to latest figures, the capital gains tax collections reached £100.4 million in the first five months of 2005 compared to £36.2 million in the corresponding period of 2006 and £18.8 million in 2005.
Demand by developers / individuals
According to Mr. Kourouklides, the increased demand derives from the developers and the individuals. “The developers rush to buy housing land before the imposition of the 15% VAT. On the other hand, the consumers take housing loans more easily. The increased demand is linked to the imposition of VAT from January 1, 2008“, he added.
As regards to the houses and flats, the study reveals that offer has accelerated but demand remains stable. The house and flat prices will increase by 2% – 4% in the first half of 2007 and by 5% or 9% in the full year 2007.
20% demand by foreigners
According to Mr. Kourouklides, it will be seen in the next few months whether the increased offer of projects will be absorbed by the market. “The property market is not a stock exchange, where prices react on a constant basis. The investments in properties are middle-long terms investments“, he noted.
Mr. Kourouklides also said that the demand for properties by foreigners is 20% of the total demand and concerns cities near the sea.
The increase in property prices boosts protests that favour the reduction or abolition of certain taxes imposed on properties. According to a StockWatch report released yesterday, Cyprus Property Valuators Association had recommended 12 measures for the correction of the property prices. The measures include the abolition of transfer fees, the more effective exploitation of the housing zones and the construction of road networks to all housing areas.
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