Cyprus property overpriced?

[kempo23]

Whilst those involved in property sales and indeed those that currently own property in Cyprus will like to think advertised prices are realistic, are they really?

Some of the key factors which are / will impact upon property prices include:

- Greece situation will have a massive effect on the Cyprus banks and therefore the Cypriot economy

- Cyprus banks have no money to lend

- Foreign investment (buyers) is key, but they too are feeling the effects of the recession

- Confidence in the Cyprus property market is very low (quality, fraud, etc)

- Huge amounts of unfinished and empty properties due to bankruptcy, are sitting on the banks spreadsheets waiting to be offloaded

Whilst I am no economist, there are plenty of experts stating that property is overpriced and needs to fall substantially. So why are we not seeing this reflected in the estate agents advertising? Maybe they have given up too?

Your thoughts?

[Nigel Howarth]

Hi kempo23

Pavlos Loizou wrote an article on this subject a few days ago - see With value gone out the window, liquidity is the key.

Some advertised prices are 'optimistic' to say the least - particularly properties bought during the boom years when prices were at their peak. People are trying to recover their investment and I'm afraid they have little hope of succeeding in the present climate.

But properties are selling in small numbers - providing the price is right - and those buying have access to funds. In the Famagusta area for example, Nicosians are buying top floor and ground floor apartments as weekend retreats.

The banks are between a rock and a hard place. They loaned money to developers and purchasers based on the value of the underlying collateral. But since then prices have fallen, buyers are in negative equity in many cases and the value of the underlying collateral has fallen below the amount of the loan advanced. If the banks were to repossess properties, they would have to write-off part of the debt - and that would put them into even deeper do-do.

Regards,

[kempo23]

Yes, I read the article, makes sense to me.

Given that it is a buyers market and clearly the advertised price is way above realistic, if someone has 'cash' what is a reasonable opening offer in terms of % below asking price? 20-25%?

[Sodyllt]

Actually I have two friends in the UK, both with two bed villas both quite a distance from the sea, both got €250,000 for their properties, they bought slightly less in both cases six years ago, they are happy with that given that they have used their properties as holiday homes in that time. They both asked for €280,000. Approx they made only €10,000 each. One sold privately, one with an EA both have good lawyers named in the BHC list.

I too am selling inland in a village, I have had a few enquiries, but nothing specific, I am selling privately and will accept sterling which has sparked an interest. I have a British Cypriot coming to see it, and the price is half a million. I expect under that price but always have in the last decades when selling a house, but have calculated all my costs and know how much to accept. I will be happy and pleased if I get it. It's not doom and gloom everywhere! My nieghbours instead of selling have rented theirs out for €995 per month, and will try again to sell in approx three years. Most of my nieghbours don't want to sell and don't need to, none of us are young bright things with a mortgage, we are older bright things with guaranteed incomes with no debts at all, so in an envious position plus we have TDs, that is one reason why we have had enquiries. Both my friends sold properties didn't have TDs which is interesting and both were sold to Nicosians as holiday homes.

[kempo23]

So you think that properties are realistically priced to achieve a sale in a reasonable time period? If this is the case I will wait until the inevitable crash comes.

[Nigel Howarth]

Hi kempo23

Firstly, I suggest that you set yourself a budget. Then look to see what is available within your budget and note down asking prices, locations, sizes, facilities, etc. You will soon find out which properties are priced to sell and those that are overpriced.

Some people will be eager to achieve a sale quickly because they want to move - maybe they have health problems, are short of cash, are homesick, miss the grandchildren, etc. These will be more open to negotiation.

Others will not be in a hurry to sell and will be prepared to wait for the right offer. These will not be so open to negotiation.

You should also speak with the Estate Agent and ask them my Top 8 questions. The answer to these will also help you when bargaining.

Cheers,