The property circles expect that the decline in property prices will reheat the activity in the market. The reference in price decreases, which was a taboo for the real estate agents and the developers till recently, is now a significant weapon in the efforts to boost demand. Although the official data show a drop in the activity of more than 60%, the property circles talk about increased mobility in the past few weeks. They insist that the improvement in the market conditions is linked to the increase in domestic demand.

Chairman of the newly-established Association for the Promotion of Property Development, Giorgos Mouskides stated today that “demand in Nicosia concerns flats and houses, in Protaras and Ayia Napa summer houses by Nicosia residents and in Limassol flats and houses by Cypriots and Russians. On the other hand, the interest by Cypriots in Larnaca and Paphos is lower, with the exception of certain areas such as Pervolia”.

Mr. Mouskides was not in the position to provide figures on the increased demand or the trends in each municipality.

As for the drop in prices, he stressed that it was “a result of the plethora of unsold housing units in relation to the downturn in demand especially in the tourist areas”.

Mr. Mouskides supported that the competitive countries such as Spain and Greece play a significant role, as well as the pressures that the banks exercise on the developers, who are forced to sell their properties at lower prices, while bigger opportunities are seen in the used houses sold by the non-Cypriots especially the British.

“In Nicosia, although prices in the city centre and the suburbs are stable, in certain areas they have dropped by 5-10%. A Larger decline of up to 15% is observed in the used houses and flats”, he noted.

“In other regions, the price decrease stands at 15-20%, in used houses and flats mostly”, he added.

Analyzing the reasons that push demand up, Mr. Mouskides said that this is attributable to the Cypriots’ mood to look for opportunities, the more attractive housing loans granted by the banks and the government’s measures to boost the property sector. “The government’s announcement for the construction of big projects such as golf courts and marinas and the upward trend in the Cyprus Stock Exchange in the past two weeks contributed significantly towards this direction.

Finally, Mr. Mouskides stressed the need for a cut in taxes and the VAT, the capital gains tax that stands at 20% and the transfer duties to 8%. There is also a need to hasten the procedures for the issue of title deeds since it might take from 3 to 20 years.

source: (published 2/04/2009)