According to latest figures released by StockWatch, property activity in Cyprus slumped in early 2009. The property market has frozen and the sales recorded an annual drop of 72% in January against a drop of 65% in December and 60% in November.
The total number of deeds of sale submitted to the Land Registry reached 452 against 1615 last January; market conditions have worsened in the past few months. In September, before the latest phase of the financial crisis, the number of deeds of sale in the Land Registry stood at 1157. In October their number fell to 1016, in November to 782 and in December to 624.
The drastic drop in activity is obvious even in Limassol, where demand is maintained to a degree by Russian businessmen. The annual drop in Limassol stands at 50%, while in other districts it has reached 70-80%.
The Cyprus government is very concerned about the shrinkage in the sector, since it is a significant source of revenues for the state, which collected €470 million in 2007 and €300 million in 2008 from Capital Gains Tax. The drop of 35% in tax revenues is comparable with the total annual decline in the number of deeds of sale, which reached 31%.
To deal with the latest developments, the government decided recently to allocate €200 million for the purchase of houses by medium and low-income families.
However, those in the property industry believe that the measures are insufficient. “The additional measures that the state has taken – including those for strengthening liquidity in the banking system – will help but they are not enough. The property market needs more support“, Chairman of Nicosia Real Estate Agents Association, Costas Kadis wrote in a memo to StockWatch.
Mr. Kadis supports that the government must promote tax cuts, must grant €50 thousand for the purchase of first home and must strengthen liquidity so that the banks can offer more favourable terms of borrowing to land developers.
According to Mr. Kadis, despite the drop in demand prices are being maintained in Nicosia and Limassol but are under pressure in other areas due to Britons selling their homes at prices 25% lower than the market prices.
Four different surveys carried out by StockWatch between August and December 2008 reflect the general view of the market that there are significant price decreases in all municipalities.
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