THE Finance Minister, Charilaos Stavrakis, is reported as saying that Cyprus property prices will go through a phase of correction, boosting beliefs that the sector is facing a crisis. “Normally, property prices will be corrected. Although the downturn in the market is expected to affect the public revenues, the government has taken into account this parameter and if recession continues, it will take additional measures“, the Minister said.
Referring to the Land Registry figures, which show a 40% reduction in property sales, Mr. Stavrakis said that the decrease was indeed significant; especially in Paphos and the free areas of Famagusta, where the reduction in sales is at its greatest.
Capital Gain Tax revenues from the sales of property have dropped by 18% over the first 8 months of the year.
Mr. Stavrakis believes that the problem is more acute in the sale of summer homes and second homes in tourist areas by locals and foreigners. “This was more or less expected due to the dependence of the property market on the British market, which is experiencing an economic crisis due to the drop in the value of Sterling“, the Minister explained.
Minister Stavrakis believes that the government’s stronger housing policy, which is expected to cost €25 million more than estimated for 2008, will moderate the downturn in the sector.
The government expects that the activity in the property sector will continue to shrink in 2009. The Ministry anticipates that the capital tax revenues will drop by 6.8% in 2009 against 20% this year.