Cyprus-Forum.com

[Tuberider]

Yiassou Svetlana !

There are good arguments from both Bulls and Bears on that site

It is worth a look !

Take care,

[twinkle]

I read somewhere that VAT on property is not payable on your first property purchase???

[Svetlana]

Hi Twinkle

Apparently yes, but no-one is clear -least of all the legislators - what this means. The general understanding is that if you purchase a new property that is subject to VAT (ie where a Building Permit was not applied for before April 2004) which is your first property purchase IN CYPRUS, there is a refund of VAT which reduces the amount you pay to 5%. However, there are restrictions on the size of the property to which this concession applies.

Lana

[Svetlana]

I mentioned I had been researching the UK property market; figures for January 2006, just released, show the following year on year rises in UK property prices compared to 2005:

Office of Deputy Prime Minister + 4.3%
Nationwide BS + 4.4%
Halifax BS + 5.1%

It will be interesting to see the impact of the implementation of VAT on land purchase in Cyprus (18% from 2008); it will push up the cost of new builds and make resales more attractive.

Lana

[Tuberider]

http://www.moneyweek.com/file/7067/what ... arket.html

[simonwjones]

So all in all guys it sounds like a bad investment at the moment.

The thing is nobody know the future and no-one know if property prices are going to fall or increase if we did we would all be very rich.

2008 maybe a better time to invest in ROC but buy then the prices may of increased even further - who knows!

Perhaps you are better to invest in property in smaller towns in Cyprus like Polis or Latchi rather than looking at Paphos, and the bigger towns. This will allow the so called smaller places to grow in size and build a reputation in the tourism world, this will hike prices up.

[cypezokyli]

hi tuberider.
i am not an expert on the issue but heres my opinion.
without having official figures , i assume that it is not just foreigners who keep the prices high. it is also our mentallity to have our own house ,straight after marriage, even if we have to pay for it for the whole of our lives. and in general houses (on the earth) not appartments.

as a concequence this rule albeit sensible , does not apply to any cypriot :

1) The 12/20 rule of investment. You should never pay more than 12 times the annual rental income for a property, and sell if it ever gets to 20. For example, if a 2 bedroom flat rents here for max £350, that is £4200 in a year and £50,400 over twelve years. Where can I find a nice new 3 bedroom flat for 50k ? Nowhere. Prices for such apartments have inflated to 80k or more in every town.

2) Real incomes have not increased significantly on the island. In fact we have less disposable income then before as the cost of living has risen and will continue to rise as a result of higher energy costs in the oil and gas markets. This strongly suggests that the rise in house prices is being fuelled by speculation and sentiment, as was the rise in stock prices during the CSE bubble of the late 90's. As any economist worth his salt will tell you, sentiment in markets can change very quickly. Locals simply cannot keep up with the massive rise in house prices on their incomes, so it follows naturally that they will come to a point where they simply refuse to buy, or will buy at a very high level of exposure which leaves them vulnerable to panic selling when things get tough.

when we reach that point , we will start building the houses ourselves (lol)
but in general you are right

3) The CSE is down in the doldrums and has been since the bubble burst. It does not make sense for the stock market to be undervalued while the property market is valued above its long-run trend. Because both are assets, that cannot be sustained. Either people are confident about the future, in which case both houses and shares should be worth a lot, or they are not confident, in which case the prices of both shares and houses should be low (this point has been plagiarized from research by Dr Andrew Oswald).

dont look for too much sense in this one. economically you might be right. practically, cypriots after the crash on CSE will not gumble there anymore. or at least not after we have a new generation of people with money... and no bad experience with CSE
now they are back to property. its kind of more secure bc they have never seen the prices of land or houses falling. when that happens, perhaps we ll start experiencing "normal economic phenomena"

5) Prices have risen by more than 20% a year since 2002 according to official estimates. This is not sustainable as salaries have not risen by a corresponding amount. In EVERY property market across the globe where we have seen prices shoot up so fast, they have come down equally quickly. See the examples of England in the 70's and early 90's, Japan in 1997 and China only recently.

its not all speculation. there is a kind of high prices, but dont forget the oil market.

in any case, for all those new couples out there lets hope that the prices will fall. i also find them absurd.

[TonyC]

I don't know specifically about Cyprus property, but I do know what has happened in Norway the last 30 years and I suspect that it's relevant as property trends are generally speaking international.

Most people buy property for one of 2 reasons -
a) because they want to own it and use it
b) as an investment

In case a) it doesn't matter if the bottom falls out of the market as you're not selling anyway. Any "loss" will be theoretical.
In case b) investors can usually choose when they will resell, so if the bottom falls out of the market, they can just wait it out. Unless we're talking about useless pillocks that shouldn't be in the business anyway!

For as long as I can remember, property prices have risen steadily (probably for the same reason that the price of bread has also risen), interrupted every few years or so by sudden spikes, often caused by unexpected changes in the interest-rate or something.

This sudden rise in prices causes a stop in turnover, which in its turn causes a so-called "crash" in the market - nobody's buying so prices fall.
This in it's turn means that people start buying again as property is now cheap and everybody likes a bargain.... which obviously results in a prices rising again, this time back to "normal".

Prices usually steady out at a point slightly above where they were before the "crisis" came.

In my experience, these spikes/crashes are short-lived, lasting anything from a few weeks to maybe a year in worst case.

So a very few people will make a killing because they happen to be selling just when the spike comes, and of course a few people will be really unlucky because they are forced by circumstances to sell there and then while prices are low. But the majority can wait til prices stabilze at normal again and won't be affected. They won't get rich quick, but nor will they be jumping off the Empire State Building.

So the bottom line is don't put yourself in a position where you can't choose your own time to sell. The so-called "property bubble" is after all just like bubble gum - as soon as one bubble bursts, you start blowing a new one....

Just to finish off....
At the end of 1989 I bought a property during a "spike", relying on being able to sell my existing home. Bad idea - the prices dropped before I managed to off-load. The loss was painful to say the least. However, 10 years later I sold again in a "normal" period. I made a 300% profit.
The moral of this story - life lasts longer than 30 minutes, the ones that aren't after quick bucks will probably get big bucks

[Gertie]

Not sure how general it is but a friend of mine has bought a flat in Paphos that he has not been able to rent out and now cannot sell. The opening of the Balkan region has refocussed the attention of those buying overseas and as S Cyprus is now seen as crowded, spoilt I think that a lot of investors are looking elsewhere.

[Tuberider]

This sudden rise in prices causes a stop in turnover, which in its turn causes a so-called "crash" in the market - nobody's buying so prices fall. This in it's turn means that people start buying again as property is now cheap and everybody likes a bargain.... which obviously results in a prices rising again, this time back to "normal".

Prices usually steady out at a point slightly above where they were before the "crisis" came.

In my experience, these spikes/crashes are short-lived, lasting anything from a few weeks to maybe a year in worst case.

Exactly. Property moves in cycles and always has done. We have just seen increases in Cyprus of over 100%. Therefore it is logical the next movement in the market will be DOWN.

The moral of this story - life lasts longer than 30 minutes, the ones that aren't after quick bucks will probably get big bucks

Someone once said, that finacial markets are merely a way of shifting wealth from the impatient to the patient. I think this is very true in many regards. Those who buy today at the height of the bubble because they cannot wait will regret it in a few years when prices plummet.