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Are Property Prices about to Really Crash

Posted by K13Ruane - Created: 8 years ago
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10 replies (Showing replies: 1 to 10)

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Posted by K13Ruane - 8 years ago

WOW - is this for real? or some kind of a sales trick?

On Thusday evening - I received a panic phone call from an agent offering me a brand new (ready to move into) villa in Protaras for €170,000. I was told that the real price of the villa (one of 22 on a new development) was normally €340,000 and that the villa has guaranteed title deeds.

The agent has also said that only one property is being sold at this reduced price because the developer is in trouble and needs a quick cash buyer.

Although the property does not suit my requirements (270SQM plot) - I am now starting to believe that prices are really crashing!

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Posted by Nigel Howarth - 8 years ago

Property prices have dropped significantly over the past couple of years, particularly in the areas favoured by overseas investors - and so have sales.

In 2007 - 11,281 properties were bought by overseas buyers who accounted for 53.1% of the market. Then the market crashed and by 2009 just 1,761 were sold to overseas buyers - a mere 21.6%. Sales so far this year are slightly worse than last.

There are literally thousands of unsold properties littering the place and some developers are offering 30% discounts, but so far these have proved ineffective.

So what has caused the spectacular decline in Cyprus’ once prosperous and thriving overseas property market?

* The fall in the value of Sterling against the Euro over the past two years means that British buyers, who account for some 50% of foreign buyers, have less equity at their disposal. At the beginning of 2007 a pound Sterling would buy you €1.47; today it will buy you around €1.20, making investments in the eurozone that much more expensive.

* The worldwide economic turmoil has also changed the characteristics of the ‘typical’ overseas property buyer. British buyers are now being much more cautious about their investment decisions. Many have little confidence in the sales brochure marketing hype and developers’ off-plan deals and have all but deserted Cyprus in favour of safer places to invest their money.

* Reports about the potential problems faced by buyers have become more widely publicised. Details of the Title Deed fiasco and developers abusing the island’s antiquated property laws have appeared on UK national television and made headlines in the press and elsewhere around the globe.

* Having been contacted by many disgruntled buyers, MEPs and the European Commission are focussing their attention onto the goings-on in the Cyprus property industry and the government’s attempts to rectify the situation.

* Where some other countries have lowered their mortgage interest rates and property taxes to encourage overseas investors, mortgage interest rates in Cyprus are amongst the highest in Europe and the government is talking about increasing property taxes it charges large land owners; a charge that will no doubt be passed on to those buying property. This approach is an anathema in other countries where governments have taken steps to reduce the costs associated with property ownership to encourage investment.

The future of the market is uncertain and I would certainly rent for 6 to 12 months to see what happens. And if you do decide to buy, buy a resale property that already has its Title Deeds - this way you should avoid the problems.

As for prices, RICS Cyprus produces a quarterly price index, the latest version came out a few weeks ago and you can see it by clicking here. Further price corrections are expected.

Regards,

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Posted by Stefan.N - 8 years ago

Property prices are totally boosted in Cyprus. I am from Varna, Bulgaria and the properties in my town are known as the most expensive on the Black sea coast, with prices around 1200-1400 Euros per square meter for the flats (normal salary about 300 euros). The prices started growing in 2002-2003 together with rumors that we are about join the EU. Since 2008 when the crisis came first the sales went down, the prices stayed up. Later the prices start coming down and two years later (2010), sales are down by 40% and prices about 25%.I can't guess what will happen here but prices WILL NOT keep the rates of Barcelona, Nice and etc... In that DESERT!!!

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Posted by Joanna0701 - 8 years ago

I bought my house in 2007 and at the time everyone kept saying i was crazy and that prices were going to fall. My husbands cousin was thinking of buying at the same time as i was and didnt. I bought my house for 113,000 CYP, so about 190,000 EUR, its now worth about 370,000 EUR. My husbands cousin as mentioned before didnt buy and is still renting as prices have gone up so much that he cant afford to buy now. When people talk about prices falling or not, you have to look at the area. Places like Paphos, Famagousta, Larnanca etc have dropped dramatically in price, as they were areas where ex pat communities were buying more than the locals. Now that has all changed as the rise in the cost of living in Cyprus is making ppl think again before coming over. Areas like Nicosia and Limassol however have not fallen that much in price and arent going to either. So all the advice you have been given so far can be right or wrong, depending on what area are looking at investing in. If it is in Limassol or Nicosia, grab now, while there are still bargains available, as trust me they wont be for long!.

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Posted by VeronicaK - 8 years ago

What are people basing these things on?
Prices have already dropped a lot and although there are a few bargains still out there most bargains have already been snapped up and the prices are unlikely to fall much further.
Many peope unfortunately bought at the peak and took 90% mortgages and cannot afford to take a loss of more than 10% or they will be selling for less than would cover their mortgages.
Some prices which were dropped last year have been put up again.

To say that prices will drop by 50% in the next 12 months is total nonsense

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Posted by K13Ruane - 8 years ago

Thanks for the advice - any ideas about land values and will they be affected in the same way as property?

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Posted by justrehab-670621 - 8 years ago

I certainly would not consider buying for at least 12 months AND I would make sure the Title Deeds are available at the same time....

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Posted by CMJG2010-694268 - 8 years ago

They already have. Look at all the adverts, the prices are coming down all the time. Best to rent.

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Posted by ASid - 8 years ago

Yes, property prices will crash. In simply terms, It has now become an over saturated market.

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Posted by Constantinos - 8 years ago

I think your bank manager, your solicitor and your accountant are totally unrealistic if they think that prices will fall to half this year. I think they are ignoring the Cypriot idea that no seller is ready to sell at a low price. There may be hundreds of unsold properties out there but the sellers will not sell because they want to receive a specific amount from a sale and no power on this earth will cause them to sell cheaper. Yes I agree that there are deals that can be made with developers who are in financial trouble but to be absolutely honest I would not deal with them even if they were giving me the property for free. There are also properties that go on the market because of people from Britain going back home. I would be on the lookout for one such a deal. Actually I bought my apartment that way this year.
Good luck to you.