Cyprus property prices - over priced?

[Adi]

Hi Nigel

Firstly, excellent web site - very informative and extremely useful I have learnt so much from it!

My wife and I will be retiring within the next few months, at present we live in the UK however; our intention has always been to retire to the sun in order to enjoy a more sedate pace of life.

My in-laws relocated to Cyprus 13-years ago and are more than happy - I have been reading and researching the intricacies and nuances relating to the Cyprus property market (of which there are many!) prior to our relocation, which we anticipate will be early 2011 - we have visited Cyprus many times and love the Island.

I have been following the various forums on your site and the AngloINFO site - initially my wife and I had planned to sell up in the UK and purchase in Cyprus; having read your advice to others, and taking into account the advice of others living in Cyprus we have now decided to rent for the first year and to re-evaluate our future options thereafter.

One of the topics on the AngloINFO forum and incidentally a further reason not to make the BIG leap to purchase was that at present Cyprus properties are dramatically over priced and that within a year or two prices will begin to drop - is this a realistic view?

In addition, I have read that expats are leaving Cyprus in large numbers - Any ideas why?

Regards

Adi.

[Nigel Howarth]

Hi Adi,

Thank you for your comments and welcome to the forum. I hope your retirement plans to move here go well. I always recommend that people should rent before they buy and burn their bridges - visiting somewhere on holiday and actually living in the country are two different things.

Unfortunately, some people find out too late that Cyprus is not the place for them. Some find that they cannot settle in a foreign country or they find family ties are too great. Renting gives you the opportunity to 'try before you buy', get to know the place, how much it costs to live here, talk to others who have made the move about their experiences, etc.

Regarding property prices, there is not a large market here and so prices are set by what people are willing to pay. I was reading an article yesterday about Spain - in some parts sales are up 200% on last year - the recovery has yet to reach Cyprus although there does seem to be some encouraging signs.

One thing that makes properties, and living here in general, more expensive than in the past is the Sterling/Euro exchange rate. Some retirees and others on a low income find that they can no longer afford to live here and have sold up and returned to the UK.

Another group that is selling up are those who came here after Cyprus joined the EU in the hope of making a better life for their families. Although some have settled here successfully and have set themselves up in business, those without a particular skill or trade have found it difficult/impossible to find decent paid employment.

A third group is those who can no longer afford their mortgage repayments due to the exchange rate. These are having particular problems in selling as most if not all do not have their Title Deeds - and the market is saturated.

Will prices drop? It's difficult to say although some developers are offering 30% discounts in efforts to attract buyers and there are also many buyers who are desperate to sell. The problems that people are experiencing at the hands of unscrupulous developers and lawyers are dissuading people from buying here. If the industry and government can sort out the mess they've made for themselves, perhaps sales will recover. If they do not, then I suspect prices will fall.

New laws should be going to parliament in a week or so that may help. Unfortunately, no-one knows exactly what these will contain. Last year the Interior Minister published draft bills and invited comment. The drafts were opposed by the Cyprus Bar Association and other groups were sceptical that the changes would resolve the problems. The Interior Minister has taken on board the comments/suggestions and the revised bills are now going to parliament. But whether they will do enough to restore confidence in the market remains to be seen.

It is unfortunate that the property industry has been unable to clean up its act. There are honest and trustworthy developers, lawyers and estate agents here, but the problems caused by the rogues and conmen in the industry are affecting everyone.

If and when you do decide to buy, please make sure you use an independent lawyer and you will avoid the problems. I had no problems buying here and neither did many of my friends.

Regards,

[june]

Yes, I agree with Nigel on both counts.

Rent before you buy as moving back if you don't like it with a property to sell in the current climate isn't going to be easy. Shop around for deals on a long term rental and your money in an invstment account will offset some of the cost.

Also, I can't see property prices rising anytime soon. Still a long way to go before people start thinking of buying abroad again. There are many burnt fingers in Spain and Bulgaria and Cyprus hasn't got any cheaper to live since they joined the EU. Quite the reverse. I'm tipping on maybe a 15 - 25% drop in house prices in the next two years or so.

Don't over stretch and don't plan to live to your financial limit as tempting as it is. Leave some slack for rainy days.