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2008 property sales down 30 percent

THERE was a 30 percent reduction in sales of property in Cyprus during the first four months of 2008 compared to previous years, the House Commerce Committee was told yesterday. The statement was made by the deputy head of the Town Planning Department, Christodoulos Ktorides, who added that £370 million were received in transfer taxes […]

THERE was a 30 percent reduction in sales of property in Cyprus during the first four months of 2008 compared to previous years, the House Commerce Committee was told yesterday.

The statement was made by the deputy head of the Town Planning Department, Christodoulos Ktorides, who added that £370 million were received in transfer taxes in 2007. Ktorides said the possibility was being examined of reducing the percentage of transfer taxes, which are currently on a scale of three to eight per cent.

Committee Chairman Lefteris Christoforou of DISY called for specific measures in order to reduce the price of houses as well as the taxes imposed. He added that his committee had decided to invite the Interior and Finance Ministers to their next meeting to explain the government’s policy on the issue.

“Most countries’ constitutions say that the state must ensure its citizens are provided with homes, as a social benefit, in the easiest possible way,” said Christoforou, adding that his committee had tired of repeating its concerns over issues, such as high VAT and transfer tax rates.

Finance Ministry Spokesman Stavros Michail explained that the government’s main priority was to prepare a concise housing policy, before examining the various taxes that are imposed.

He added that the 15 percent VAT imposed for property purchases was part of Cyprus’ commitments to the EU.

The committee will continue examining the issue in two weeks’ time.

Copyright © Cyprus Mail 2008


Another report, this time from Stockwatch, paints a less depressing picture:

Property sales down 17%

Property sales in the first quarter of 2008 declined 17%, boosting estimates that the sector has slowed down.

According to Land Register figures released on Tuesday, the total value of property sales in the first three months of the year fell to €794 million from €956 million in the corresponding period of 2007. Similarly, sales drooped to 4,143 from 5,202.

The figures concern the transfer of title deeds and include acts that possibly occurred in the past few years.

The slowdown in the property sector is also observed via the state’s revenues from the capital gains tax paid on the goodwill of the sold properties.

In the first three months of the year, the revenues from the capital gains tax fell 5% to €90.9 million from €96 million in the corresponding period of 2007.

The figures are in line with those presented by the Developers’ Association Chairman, Lakis Tofarides to the House Commerce Committee. According to Mr. Tofarides, “several factors have affected the property sales in the seaside areas such as Larnaca and Ayia Napa. Nicosia has not been affected at all. The customers in Limassol have been replaced by the Russians”, he concluded.

© 1999 – 2008 Stockwatch Ltd.


And the Financial Mirror reports:

Cyprus property sales dive 17%

Cyprus property sales registered a 17% Year-on-Year reduction in the first quarter of 2008 according to data from the Cyprus Land Registry.

The value of property deals transacted in the first quarter of 2008 reached EUR 794 mln compared to EUR 956 mln in the same period in 2007 for a 17% decline. A similar decline was registered in the number of successful deals, which in 1Q08 tumbled 21% YoY to 4143 from 5202 in 1Q07.

The data confirm the widely held belief that the booming property sector, which had become the driving force supporting the Cyprus economy has entered a period of slowdown. The Chairman of the Cyprus Property Developers Association, Lakis Tofarides during a briefing at the House had warned that property sales had in fact declined by 30% with Larnaca and Ayia Napa areas the worst affected, while Nicosia was faring better, as its mostly supported by locals. The influx of Russian buyers had in part cushioned the impact in Limassol, while results in Paphos were mixed.

A slowdown in the property sector is certain to have a dire impact on state finances, which in recent years on the back of a booming property sector have shown an incredible improvement, moving from constant deficits into a surplus.

The fiscal surplus of Cyprus in 2007 stood at EUR 250.6 mln (CYP 146.7m) vs. a fiscal deficit of EUR 212.7 mln (CYP 124.5m) in 2006, according to data compiled by the Financial Mirror.

The reversal in deficit was the result of higher direct (EUR 2.23bln: +42% YoY) and indirect taxes (EUR 2.92bln: +19.5% YoY). Total revenues in 2007 reached EUR 6.88 bln (CYP 4.03bn) recording an increase of 10% YoY, whilst total expenditures were up by just 3% YoY to EUR 6.62bn (CYP 3.88bn).

In the first quarter of 2008, the capital gains revenue declined by 5% to EUR 90.9 mln from EUR 96 mln in 1Q07.


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