Cyprus-Forum.com

[Crivens]

Most of my Cypriot friends believe (genuinely) that prices will double when the Euro hits

Yeah, I've heard stuff like that. Amongst things like get a loan just before the Euro hits and you will have double the money. Think it comes from not understanding conversion. Currently if your property costs, say, £100k then it will be worth about 170k in Euro when we convert. Of course the same thing will happen with your wages! Brilliant! They kind of forget that everything else gets converted too. The sort of house you could buy in Spain for £100k CYP will be exactly the same with 170k of Euro.

There will be rounding changes, esp. with the shops trying to get prices to the nearest "9", but apparently there will be fines for companies that round up too much. ie. don't take the mick. According to the papers Carrefore and a few other big stores will take the hit and lower the rounding. eg. if £100CYP is 170.784 euro then a lot of stores will convert that to 170.99 euros (typical pricing). These bigger stores will instead convert to 170.69 or even 170.49 with any luck (.49 and .99 is always the best).

Cheers

[miltiades]

J&J Wrote:
"""how can anyone compare paphos with west London ? it beggars belief ! """

Indeed it does ! Here are some basic comparisons :
Weather
Personal safety
Environment
Traffic wardens , cameras
Congestion charge
Exorbitant prices
Multiculturalism
Traffic
Terrorist threat
Dreary looking buildings and third wold people all around you
Yes I would say it is unfair to compare Paphos with West London !!!

The prices of property in Cyprus over the next 5 years will rise substantially just as wages will with the introduction of a minimum wage soon to become a law , and foreign investors finding it much easier to to invest in a Euro Cyprus.

[Avanapa]

I maybe wrong but is,nt it more to do with the currency exchange rate being much more favourable to overseas investors when Cyprus go Euro than is the case at the moment. At the moment, the risk factor for investors is far higher due to currency exchange losses. When Cy goes euro investors,( from other euro countries in particular), will not have the worry of losing out every time the currencies fluctuates. I,m not an expert but it makes sense to me. For those of us at present paying a mortgage eg, find that each monthly payment can vary significantly each month depending on the exchange rate. Come January, that will not happen to anyone from the eurozone. This will attract much more investment. It seems to me that the only mistake Cy can make is the failure to recognise when the market is saturated as is the case in Spain. I know it may seem that it is already saturated but I do,nt believe this to be true. There are many sales going on all the time. We just don,t always see them. I have mentioned on here before that I used to study the BUY & SELL mags and saved many properties that I liked only to find that a few months many of the properties were sold. Of course like any market the houses tended to be the better located or more attractive style of houses that sold. IMHO the market will improve steadily in the future with an initial surge shortly after January 2008.
Chris

[dinos]

yet they keep building and building like crazy - and they expect me to believe that prices will rise ?

i think we are heading for some trouble...

They have to keep building because the loans they take out for the land and development costs are often mortgaged on the basis of the houses to be built on it. So they have to build in so far as the buildings become the security required by the banks - when the sales start to fail to cover interest costs, the banks move in and take ownership. If they cannot sell at a price to recover the loans, or just cannot sell - you get problems with the bank sector as is happening in Spain and the US at the moment.

No reason to believe Cyprus is at the stage

If you're talking about the sub-prime situation, this is a good one. For sure, the risks are not limited to a few people with bad loans. The mortgages involved have been securitized and sold as high quality securities. If significant defaults occur, the debt will be downgraded. Because many of the buyers of the debt are limited to purchasing highly rated debt, the downgrades will impel sell-offs. It's just not clear at this point what the magnitude of the problem is.

@ J&J, the US property market has not "collapsed." Sales in the northeast are down about 3.5% or so. The south is taking a larger hit at a bit over 7%. I'm not saying that a collapse won't happen, just disagreeing with this part of your post. http://www.financemarkets.co.uk/2005/08 ... ees-slump/

What I see as a bigger problem is your correct point about increases in money supply. US M3 rose over 130% from 1995-2006, at which point the Federal Reserve stopped reporting it. In my opinion, there really is no way to quantify US inflation, and the numbers the government is releasing are wrong, biased, or - more likely, a combination of the two. It really concerns me that people believe that inflation is really 3-and-change% here. Especially when oil prices have raised the cost of everything from electricity ($150 per month, plus $150 "delivery surcharge") to business services AND, just to top it off, the Bush admin's ethanol initiatives are causing the prices of corn, and therefore milk, cheese, poultry and meat to rise too. But the government still comes out and says "if you don't count all the prices that went up, then prices stayed the same." And people somehow believe it. Unbelievable.

[pantheman]

It is rumoured that house prices will rise by 20% on entering the Euro, can anybody qualify this by giving the reasoning behind the rumour.
I know that things usualy get rounded up, but 20%.

I guess this increase will be directly attributed to the 15% VAT on land sales from 1/1/08.

The euro kicks in from 1/1/08 and i guess thats where all that comes from.

As for over supply, I don't see that, the developers on the eatern side (at least) actually sell the stuff before planning permission is even granted. So I don't see where all these hundreds of empty properties that you lot are going on about are.

there, i said my piece, now wheres my buysell catalogue??

[Baggieboy]

its on every street corner, desperately trying to offload the thousands of properties that won't sell!

[dinos]

It is rumoured that house prices will rise by 20% on entering the Euro, can anybody qualify this by giving the reasoning behind the rumour.
I know that things usualy get rounded up, but 20%.

I guess this increase will be directly attributed to the 15% VAT on land sales from 1/1/08.

The euro kicks in from 1/1/08 and i guess thats where all that comes from.

As for over supply, I don't see that, the developers on the eatern side (at least) actually sell the stuff before planning permission is even granted. So I don't see where all these hundreds of empty properties that you lot are going on about are.

there, i said my piece, now wheres my buysell catalogue??

Pantheman, nice point on VAT. I thought it was closer to 18% though? It bolsters your point either way...

[devil]

The rumour is
Pure Speculation

[Southerner]

It is rumoured that house prices will rise by 20% on entering the Euro, can anybody qualify this by giving the reasoning behind the rumour.
I know that things usualy get rounded up, but 20%.

I guess this increase will be directly attributed to the 15% VAT on land sales from 1/1/08.
The euro kicks in from 1/1/08 and i guess thats where all that comes from.

Will this apply only to new builds?

[621andy]

According to the papers Carrefore and a few other big stores will take the hit and lower the rounding. eg. if £100CYP is 170.784 euro then a lot of stores will convert that to 170.99 euros (typical pricing). These bigger stores will instead convert to 170.69 or even 170.49 with any luck (.49 and .99 is always the best).

Don't you believe it...they did it for a bit in France when the € came in, but they very soon crept up again...as Max Boyce used to say- 'I know cos I was there!'