dplees9 wrote:The problem is the world recession. However, once that is over people will want to buy in cyprus again. The predictions are that the economy will start to improve next year, I guess from then on the prices will stabilise and start to move up again
Oh really, I think you are being a little too optimistic.
Property prices slashed
By Charles Charalambous
REAL-ESTATE advertiser BuySell has slashed the asking price on 217 selected properties across the island, after receiving “requests from thousands of customers asking for bargains and opportunities”, according to a marketing email the company sent out this week.
The selected properties range from one-bedroom apartments via multi-bedroom detached houses to a 10-bedroom bungalow, with prices ranging from €41,000 to just under €940,000.
According to BuySell ten of the properties are on sale for 50 per cent less than market value, while 45 properties are going for 40 per cent less and the remainder for 30 per cent less.
“The whole property sector has slowed down. The coastal areas – Paphos, Larnaca and Famagusta – have been particularly badly affected”, BuySell a marketing team member told the Cyprus Mail yesterday. “Prices had been rising since 2001-2002, so this is an unusual step for us to take”, he added.
Some of the ads indicate that the property for sale has not yet been completely built, and only feature the developer’s illustration rather than actual photos. This suggests that these particular sellers either no longer regard their property to be an attractive investment or are in financial difficulties.
The most recent BuySell Home Price Index (BHPI) showed that overall, property prices withstood the global property market recession in 2008, recording a year-on-year increase of 2.8 per cent, compared to a total increase of 19.2 per cent in 2007. One of the main factors in the 2008 figure was the worsening of global economic conditions.
The BHPI was created and is updated monthly on behalf of BuySell Cyprus Real Estate by MAP S.Platis. The Index is announced quarterly and depicts the movement of prices at which residential properties are actually sold in Cyprus, based on the extensive, Cyprus-wide, BuySell Cyprus Real Estate database.
According to economic analyst and BHP creator Stelios Platis, what we are now seeing overall in the property market is probably an “adjustment” in over-ambitious asking prices. “Up to now, we haven’t seen a drop in selling prices, but in asking prices. Generally, people’s expectations of what they could ask for have been very ambitious, sometimes as much as 15 per cent more than in the previous year. In the fourth quarter of 2008, asking prices came down dramatically.”
As for properties being sold on before even being completed, Platis suggested that some of the smaller developers, especially those who entered the market in the more recent period, may be taking this step to limit their exposure to the banks. “It makes sense for someone in that position to sell now at a discount rather than in 6-12 months’ time, after paying his profit to the banks in the form of interest on loans”, he said.
Platis thinks that overall, the property market is very far from the point of pulling the Cyprus economy into recession, as the amount of unsold new housing stock is relatively small. He said: “We would have to see actual bankruptcies among developers before a market collapse becomes a possibility. In that scenario, those developers’ properties would be seized by the banks and auctioned off, thus driving the market down.”
In terms of prospects for this year, Platis foresees that there may be a spill-over effect from the tourism sector to the property market: “If this summer we don’t see the tourism sector yielding decent returns – say at the 2005-2006 level – then we may see problems for those who are active in both the tourism and property sectors.”
