PROPERTY values in the urban centres of Cyprus have fallen by more than 10% as the property slump spreads beyond the prime tourist areas, experts said on Thursday.
The global financial crisis has not only seen holiday home prices plummet but had a knock-on effect on the local housing market, according to the President of the Cyprus Land & Building Developers Association Lakis Tofarides.
“The price of a main residence in the centres of Nicosia, Larnaca, Limassol, Paphos and Famagusta has dropped by over 10%,” he told reporters on the sidelines of the 5th real estate conference.
He suggested that now was the best time to buy as the housing market had reached its lowest point while land has retained its value.
Between 2004 to 2007 property prices enjoyed an average annual increase of up to 20%.
The government was also urged to be extra flexible in helping first time buyers in the shape interest-free mortgages and widening the income criteria imposed by the Housing Finance Organisation.
Although the government has pumped €200 million into the organisation to help revive the housing sector, Tofarides said less than 50% of this money was being loaned because of the €40,000/year income limit.
In addressing the conference, Interior Minister Neocles Sylikiotis said the failure to process a 130,000 title deeds snared in the system was tarnishing Cyprus’ reputation among foreign investors.
It is estimated that for every 10,000 title deeds still pending, the state loses a €100 million in lost revenue plus interest.
Another survey suggested that Cyprus ranked 7th among the countries in which UK buyers had shown an interest during August (Spain was top).
Among Russian holiday home investors, Cyprus is ranked 8th with Bulgaria taking top spot.
The average budget among Russians for a Cyprus holiday home is about €240,000 with many buyers preferring Limassol.
Most foreign residential purchases are in Paphos (45%), followed by Limassol and Larnaca (both 20%).
Some 50% of British buyers prefer Paphos while 80% of Germans and 60% of Russians opt for Limassol.
According to the Land Registry Department, property sales have nose-dived 52% in the first eight months.
The end-of-year outlook is unlikely to change with Cyprus suffering its worse slump in over a decade.
Another main concern is the ratio of house prices to incomes widening between 1998 and 2008 thus making homes less affordable.
© 2009 Cyprus Weekly
