by devil » Tue Nov 09, 2004 3:32 pm
The Cyprus property market is a paradox: increased supply, lower demand but increased prices. To understand this, one has to look at the Stock Market collapse 2 or 3 years ago.
In the second half of the 1990s, speculators were buying anything on the stock market and prices rose rapidly. On the promise of quick and easy profits, they enticed the naive "investors" to follow their example and many such put everything they had and much of what they didn't have into the market. The CSI index rose to dizzying heights, about 900, when the speculators saw that further investment was slowing down and got out, fast. The index dropped to under 100 within months (it is still under 80). The speculators (and stockbrokers) made a 3-6-fold profit on their original investment, while the poor ordinary investors were left with almost nothing.
The speculators were left with a mint of money on their hands but weren't satisfied with just 2 or 3 % interest from a bank, so they invested in land and immoveable property. They pulled down, renovated and built like fury, mostly flashy but cheap construction, cutting as many corners as possible. They put a lot of this property on the market at very exaggerated prices, selling mainly offshore to buyers who thought they were getting a bargain. Ordinary house owners, saw the "value" of their own property apparently rise and started to ask ridiculous prices if they had property to put on the market. And so a second bubble is slowly getting larger with more and more property on the market at exaggerated prices. This bubble will collapse at some time in the future, just as the stock market collapsed and, in general, the same people will profit, at the cost of those people who innocently bought their houses at an inflated price.
These same people are now hedging their bets by buying property in N. Cyprus at a relatively low price.
If this sounds cynical, this is not intended. I have had no vested interest in either bubble, as I bought my house long before even the stock market bubble. It is now theoretically worth the double what I paid for it, but I enter its value in my portfolio at the price I paid for it, less amortisation, but it is not for sale.
My advice is wait until the bubble bursts before contemplating buying property here. You will probably save 30% or more, even much more, on a property.
