THE ASKING price for many properties in Paphos has plummeted by at least 25 per cent in the last 18 months, yet few are being sold apart from those regarded as “real bargains”, experts say.
The rental market is faring no better and industry professionals are divided over when the situation will improve.
Natalie Alexiou, who has been in the real estate business for 30 years, says she has never seen the market as depressed as it is now, with prices falling by so much and so swiftly.
“A villa which would have previously sold for €450,000 is now going for €300,000, and an apartment priced at €125,000 is now selling for €80,000,” she said. “And this has all happened in the last year-and-a-half.”
Experts blame a host of interwoven factors for the stagnant market, ranging from the global recession to the Title Deeds fiasco and local banks imposing stricter lending terms for property purchases.
Banks have cut housing loans by 50%
A bank manager in Paphos told the Sunday Mail that banks have cut the number of housing loans by about 50 per cent. “Even if there is a demand to buy, banks are afraid to lend and try to avoid it,” he said.
“There doesn’t seem to be any good news for the housing market in Paphos.”
People have become a little too greedy
In some instances, prices in Paphos had simply been too high before the fall, experts believe. “People had become a little too greedy,” Alexiou said.
A correction in the overheated market was seemingly inevitable. But its depth and scale – reflected by the forest of ‘For Sale’ signs in the hillside villages around Paphos – was largely unforeseen.
Some experts, however, are relatively optimistic, among them George Mais, the president of the Paphos branch of Cyprus’ Land and Building Developers’ Association. He agreed with Alexiou that prices have dropped in some areas of Paphos and especially in the re-sale market.
“Some properties or locations just aren’t popular any more,” he said.
Russian buyers are leading the way
But new properties and those near the sea or with good views seem to be holding their value, he added. And he sees signs that the Paphos market is finally picking up, with Russian buyers leading the way.
They are choosing Paphos “because it is quiet, there are many areas of outstanding natural beauty and it’s safer than a lot of other towns in Cyprus,” he said.
Mais also argued that some Britons desperate to sell and repatriate their money are not necessarily sustaining a loss because they bought when sterling was strong. So even if they sell their property for less than they paid for it, they are still “coming away with something”, he said.
Alexiou, however, is doubtful that Russian buyers are having much impact. “They are mainly purchasing in Limassol,” she said.
Pontians are buying at the lower end of the market
Members of Paphos’ large Pontian community are buying some properties, but at the lower end of the market. “They are making very low offers on the cheapest properties and some vendors are selling because they are desperate,” Alexiou said.
Her buyers, as with most estate agents in Paphos, used to be mainly British. More recently, they have been “Cypriots with a nest egg” taking advantage of discount prices as “an investment”.
Two years ago, Alexiou was selling at least one property a month to a British buyer. No more. The last house she sold for a British client was three months ago in the upmarket village of Kamares. The asking price was €400,000 but a Cypriot buyer snapped it up for 300,000.
“It belonged to an elderly couple who wanted to go back to the UK as they were getting older and wanted to be close to family, especially their grandchildren. This happens in a lot of cases.”
Some, desperate to sell, try to rent their property if they find no buyers. But the rental market is equally in the doldrums. “A villa which previously rented for €800 a month now gets about €500,” Alexiou said.
She believes these lean times will have at least one positive outcome.
Survival
A “survival of the fittest” in the industry will help weed out what she calls the ‘cowboys’ – developers and estate agents who are operating without a licence.
“We [estate agents] also have to try and co-operate with each other more, drop house prices and be flexible with our fees,” she added.
Tourism may bolster the market this summer
Some also hope that the significantly improved outlook for tourism this summer may bolster the property market: many current home owners in Paphos are former holiday-makers whose visits encouraged them to buy for retirement or leisure purposes.
Cyprus’ revenue from tourism was up 53.5% in April compared to the same month last year, according to official figures published last week.
People won’t buy properties without Title Deeds
Mais, meanwhile, hopes that new legislation passed last year will soon resolve the Title Deeds problem. “People can’t and won’t buy without them,” he said.
Hundreds of properties for sale in Paphos have yet to be issued with Title Deeds, a problem that has contributed to the drop in the number of house sales, especially in the case of new properties.
Mais also believes that a concerted drive to get going on proposed infrastructure projects for the Paphos area will help the market. “And we must increase the quality of our services,” he said. “I hope things will get better in the next few months.”
Alexiou remains sceptical. She was at a recent conference in Paphos of the International Real Estate Federation, FIABCI, where there was little cheer from guest speakers.
“They said it would be at least a year before any improvement would be seen in the Paphos real estate market, and even then it would only move at a snail’s pace.”
@ Dimitri, you have got it in one !
@Robert, I agree, especially with the tightening of lending the oversupply and lack of demand…..
@ Dimitri. Unless the Title Deed scandal is not sorted out, (ie Title Deeds available at point of sale, end of story, as per the rest of Western Society.) Then as far as I can perceive, these people expecting an upturn in the the Cyprus property market will be waiting till “Kingdom Come”.
@k I agree, developers not desperate to sell will sit it out no matter how long it takes, and if indeed the housing market works in cycles they will be waiting quite a while for it to awaken…..
25% drop in asking prices over 1.5 years, at that rate property prices will be next to nothing in a few years…
We reap what we sow. Prices were not only overinflated before the gradual decline they were in the realms of cosmic greed. Just go back a few years & check on the prices across the Island then.
Until we admit that the Brits came, we fleeced them out of every penny we could because they were silly enough to pay it without question, then we will never return to normality. Brits have, by their actions, overinflated the housing market prices, and now we expect those prices to be the norm.
Those of us who build our own know that to build to the same standard as the average holiday home costs almost nothing. The ‘tarting up’ that the foreigner sees is by degree but quite cheap (in spite of the continual use of the word luxury) so anyone buying the sub standard offerings for top dollar prices is at best naive or plain foolish. Yes there are well built homes but I would suggest nowhere near any of the tourist resorts or holiday home areas.
A discerning knowledgeable buying public is needed to push our market into the 21 century together with the solving of everything that is wrong with the process of buying. That will not happen as we either fail to or refuse to address the core issues.
Very much the same in the north of the Island.
The more information which is now publicly available about the Deeds farce and the 35% drop in the value of the Pound Sterling has exacerbated the downturn in an overheated property market.
The above article is spot on. What used to be the prices in CYP are now prices in Euros. In some areas its even lower. Yet we (agents) come across a lot of medium to small size developers who simply do not want to sell at current market prices because the recession has not hit them, their exposure is minimum and their capital is huge. Even if there is a buyer, they cannot find what they are looking for in their locality from their local developers. The property bubble has burst but in the faces of agents and the big developers who are being held to life by the banks.
Tourism being up is hardly surprising when you consider that Paphos as a tourist destination has been all but closed down for two years during the reconstruction of the sea front.
Title Deeds will still not be given at the point of sale on new build properties and the new legislation does nothing to address the problem of developer mortgages.
Yes sir, people did become a little too greedy. Those people are developers, banks, estate agents and lawyers.
Russian buyers will be put off just like any other buyer if they discover the truth.
As for fancy infrastructure projects, why not start by resurfacing roads when they are dug up and clearing all the piles of rubbish dumped anywhere and everywhere. What do you think the average tourist must think when he/she ventures out in their 5 year old rent a car.