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Cyprus housing market stumbles

Compared to other European member states, the housing market in Cyprus performed poorly in 2010, with price falls over the year averaging more than nine percent.

THE Cyprus housing market was amongst the worst performers in the European Union during 2010 according to the Knight Frank Global House Price Index and the RICS Cyprus Property Price Index.

Perhaps not surprisingly, Ireland had the worst performing housing market in the European Union with prices slumping 10.8% over the year. Lithuania was next poorest with prices declining by 10.1%. Cyprus came third from bottom with price falls averaging 9.3%.

Apartment prices

Prices of residential apartments fell by an average of 11.2% across Cyprus. The areas popular with overseas investors and local summer home buyers experienced the worst of the falls; prices in Paralimni/Famagusta slumped 23.2%, those in Larnaca dropped by 14.4% and those in Paphos fell by 10.2% over the year.

Prices in the port town of Limassol fell by 6.6%, while those in the capital Nicosia fell by just 2.4% over the year.

House prices

House prices in residential areas fell by an average of 7.4%. The worst hit area was Larnaca, where prices fell by 13.2%, followed by Limassol (-10.0%), Paphos (-7.2%), Paralimni/Famagusta (-5.1%) and finally Nicosia, where house prices fell by just 2.3% over the year.

Readers' comments

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  • Gavin Jones says:

    dimitri & others.

    In simple terms it’s called FRAUD. There’s no other word for it.

    And this evil, criminal conspiracy has been perpetrated by the developers, lawyers and financial institutions and condoned by successive governments whose members have been/are hand in glove with them.

    QED.

  • dimitri says:

    @unbelievable, ok so regarding foreclosures etc and what I will say will sound cheeky but most Cypriot banks so far don’t make a big fuss over it so they save face (what face you may say?) having said that the core of the issue here is unsuspecting buyers getting lumbered with developer debts, and the risk of losing their homes because of this.

  • Unbelievable says:

    @Nigel, so home owners are in danger of losing every penny in the event of Banks re-calling a loan.

    Liquidator will sell houses at ANY cost in order to pay back as much of the loan as possible!!!

    …and the new legislation passed by Cyprus Law Courts cannot help out in this situation – NICE !

    I suspect the ‘Sale of Contract’ preventing the home owner selling or even giving it away, is designed to protect the Banks.

    The Developer can walk away by bankrupting their company anytime.
    The Banks can retrieve as much of the loan as possible.
    The home owner can not walk away from any of this.

    Surely this is very similar to a ‘Restraint of Trade’ – Which Is ILLEGAL most of the time

  • dimitri says:

    @unbelievable, I will talk to some local banking people and see how the recoveries section works and get back with an update….but I have heard stories where certain persons owe and are behind on repayments and banks take the nicey nice approach in the hope that this will work…i.e taking out whole departments to an establishment ‘owned’ by such a person in debt etc…we shall see what happens when the banks get squeezed.

  • @dimitri – We’ll have to wait and see. I’m sure that the latest amendments to the property laws will help encourage the market, but it’s going to take many years before property sales return to their 2007 levels.

    And it’s going to take many years for Cyprus to recover its credibility in the overseas property market.

    As someone once told me when I started in business ‘credibility is like virginity, you can only lose it once’.

  • @Unbelievable – The role of any liquidator role is to dispose of the company’s assets for the maximum amount possible, pay the fees and charges associated with the liquidation, and pay the secured creditors in order of priority.

    So in this respect, the ‘True Market Value’ of an asset is whatever the liquidator can get from its sale.

    In Spain, where a number of developers went to the wall, liquidators could not recover all the money owed to the banks – and as a consequence the banks were forced to sell their own assets to recover money.

  • dimitri says:

    @Nigel, does anyone think that the RICS comments will hold true?

    Friday, 21 January 2011 RICS Cyprus Property Price Index RICS does not expect a recovery in the property market until the second of 2011. The latest RICS Cyprus Property Price Index published this month…

  • Unbelievable says:

    Does anyone know how it works when the Developers go bust and Receivers step in.

    What becomes the ‘True Market Value’ when Liquidators are assessing the outstanding debt?

    It definitely wont be in the non-Cypriots favour!

  • Gavin Jones says:

    Nigel.

    Not too sure about the word “stumbles”.

    The phrase “keels over and dies” would possibly be more appropriate…

  • @Odd_Job_Bob – Thanks for your comments. The charts are based on the on the RICS Cyprus Property Price Index for the past five quarters, which you will find in the ‘Property Prices’ section – and on the RICS Cyprus website.

    The Knight Frank Global House Price Index for Q4 2010 contains property price movements over the year for 49 countries. (The entry for Cyprus is incomplete because the annual price movements were not available at the time of going to press).

    @Mark – Regarding Alpha Panareti, you may be interested to read MEP David Martins recent question to the European Parliament

  • Odd_Job_Bob says:

    We all know that “House Prices” can be measured in a number of ways. There are “Prices at which houses are not selling” (Asking Prices), “Prices at which houses MAY sell” (offer prices), “Prices the bent surveyor and his property developer mate would like them to sell for” (Cyprus-RICS-valuation, based-on-the-notional-value-attributed-to-houses-that-may-not-actually-be-on-the-market-Prices) and Sales Prices (the price at which they actually shift). There’s also what bankers call the Moron/Mug/Fall Guy/Patsy Price. This is the price at which an uninformed buyer has delved into the market and bought an otherwise worthless asset in a DEAD market as the lone purchaser (in % terms of no. of properties for sale), based solely on the Asking Price (for definition of which, see above).

    It would be interesting to know on which one of these highly respected and industry-acknowledged prices the above report was based.

    In Hy Brazil, even in the middle of the final sing-song, I am sure there were one or two, recently stepped off the boat, who were enquiring about purchasing real estate in this idyllic island…

    Teeeee-tum, teeee, tum (we’re definitely getting better!)

  • Peter says:

    @Mark Harpen on your comment from Alpha Panareti.

    It reminds me of a quote in Tom Sawyer made by Huckleberry Finn. “Just you saying it’s so, don’t make it so”

    Unless of course you live in Cyprus, and then they can fool all of the people all the time, ye really. Title deeds are unimportant and have been overstated. Honest Indian.

  • andyp says:

    Odd Job Bob Is that what Hy Brazil looks like on a bar chart?

  • bitter buyer says:

    I’d be infinitely better off in Ireland with a fall of 10.8% on a house with deeds, which I owned, than a 9.3% fall in Cyprus on a fully paid for property which remains deedless and unsaleable.

  • Mark Harpen says:

    A recent update from Alpha Panareti included this comment:

    “Perhaps the most important result to point out, regarding both St George Hills and all other Alpha Panareti developments, is that Alpha Bank also decided NOT to devalue any of the properties, something which has happened with many other developments across the island. We understand that this is based on the quality of the building, the design and the location of the properties in each development, by comparison with other properties currently for sale in the areas”

    Yes yes, I know what you are thinking!!!! I haven’t laughed so much for a long time. Clearly Alpha Panareti are deluded.

  • Robert Briggs says:

    I wonder why?

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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