When the Department of Lands and Surveys released data on sales contracts for January, it struck me the numbers and percentages were presented without analysis, indicating the beginning of 2021 was disastrous.
Almost everyone involved in the field focused on the 23% decrease compared to the corresponding month of 2020 and the 30% decrease compared to December 2020, disregarding essential factors relating to this period that made things different.
I will briefly mention there were no restrictions in force last January.
The sense of uncertainty hadn’t yet gotten under people’s skin.
I want to clarify that my intention is not to be the harbinger of glad tidings since the real estate sector faces significant challenges and is evidently not in the best shape. However, I believe a more thorough data analysis is necessary, not only to have a better grasp of the situation but mainly to avoid giving the public the wrong impression and spread panic.
In any case, if we look at the matter practically and sensibly, no market in the world can withstand monthly fluctuations in the region of 20-30%.
We estimate that the Department’s corresponding data in February will show a significant increase compared to the previous month, mainly because COVID-19 restriction measures were relaxed.
Since we were in lockdown during the first three weeks of January, the Department was understaffed, several transfers and deposits were moved to February.
We can safely predict, assuming there is no new wave of cases, April and May will be significantly better than the corresponding months of 2020, simply because there was a national lockdown back then. There was a market freeze then.
Will anyone remember that, though?
Making selective mentions to changes without accounting whether the comparison/calculation is founded on a factual basis amounts to mathematical distortion.
Indeed, there is still great uncertainty with regards to foreign property buyers.
That because of COVID travel restrictions and due to the abolition of the Citizenship by Investment scheme.
This uncertainty mainly derives from non-EU buyers since purchases from EU buyers have remained stable in the past few years.
Of course, in January, sales contracts filed by EU buyers had a monthly decrease of 47%.
That is because: British buyers – a large market – are now classified as non-EU buyers following Brexit.
Had this change not happened, we estimate the decrease would have been a lot smaller.
At the same time, the 17% decrease in non-EU property buyers would have been even greater.
For 2021, we believe interest from Cypriot property buyers will remain at satisfactory levels, possibly reinforced in the second half of the year if the pandemic is under control.
During the pandemic, bank deposits made by Cypriots recorded an increase, with many now looking to acquire real estate either for investment or for their own use.
As we already mentioned, much of the uncertainty is down to foreign buyers, where there has always been strong dependency.
It should be taken into account they were responsible for 37% and 43% of all sales contracts in 2019 and 2020, respectively.
What is more, the above percentages would have possibly been different if there were any data about the value of the sales contracts.
Once again, though, we should not be fooled by numbers.
For example, if in Famagusta, there was a 63% decrease in transactions made by non-EU buyers, this actually means that only seven sales contracts were filed instead of 19.
This is what we call the Percentage Fallacy.
The same fall in percentage points would have been far more distressing had the sales contacts dropped from 200 to 74.
So, until the pandemic situation is all straightened out, as the now non-EU British say, stay calm and keep selling (or buying)!