THE number of contracts deposited at the Land Registry gives a good indication of how many new properties are being sold in Cyprus. In the first eleven months of 2008, 14,403 contracts were deposited. This compares to the 19,478 and 15,500 deposited over the same period in 2007 and 2006 respectively.
But what is even more worrying than the drop in property sales is the current downward trend, which is shown by the dotted line on the chart below. Looking forward to the prospects for this year, the signs are very ominous.
Property sales surged throughout the whole of 2006 and for most of 2007. They levelled off and started their decline towards the end of 2007. This downward trend continued throughout 2008 with just 782 contracts being deposited at the Land Registry last November.
If sales of new property in Cyprus continue to decline, property developers are not going to have sufficient money flowing into their business to service their debts; a number of them will certainly collapse.
Many will welcome the shake-up in the industry, which will hopefully result in many of the rogues masquerading as property developers being forced out of business. But when this happens the banks to which they have mortgaged their land will look to recover the debt, and those who have bought property on that land are at risk of losing their homes.
Just last week I heard that the administrators had been called into a property developer in the Larnaca District. Could this be an indication of worse things to come?
The Cyprus Government recently assured the British Government that it intends to introduce a Bill to address this issue. But exactly when that bill will be introduced, what it contains and how it will prevent people from losing their homes remains to be seen.
