THERE appears to be a declining trend in the domestic sales of property in Cyprus. Although the overall annual growth remains in double-digits it seems probable that the market will slowdown and further deteriorate by the end of the year.
Cyprus property sales to the domestic market in the first half of the year had increased by 26.8% compared to last year and there was much optimism about its future.
However, for the third consecutive month domestic sales have declined in spite of falling prices, other sales incentives and distressed sales. This decline has more than halved the overall increase this year, which by the end of September had fallen to 11.4%.
During September, the number of contracts of sale in favour of Cypriot buyers deposited at Land Registries throughout Cyprus was 507 compared to the 584 deposited in September 2009; a fall of 13.2%.
The worst hit district was Larnaca, where sales fell by 27.8%. Larnaca was followed by Paphos (down 19.6%), Famagusta (down 19.3%), Limassol (down 7.2%) and finally Nicosia (down 6.3%).
If this declining trend continues it seems probable that domestic sales for this year will only be marginally better than those achieved 2009, which was the poorest year for sales on record since 2002.
On Monday Finance Minister Charilaos Stavrakis presented the state’s 2011 budget to House President Marios Garoyian describing it as “the tightest in the past 30 years”.
According to a report in StockWatch one of the measures the government plans to introduce is an increase in property tax, which will bring in additional revenue amounting to €10 million. It has also been rumoured that the government plans to increase VAT to 16 percent.
Should these measures be implemented it seems likely that property prices will increase and that the domestic market will remain depressed until the economic situation improves.