Cyprus property sales dive 17% in 1Q08

Cyprus property sales registered a 17% Year-on-Year reduction in the first quarter of 2008 according to data from the Cyprus Land Registry. The value of property deals transacted in the first quarter of 2008 reached EUR 794 mln compared to EUR 956 mln in the same period in 2007 for a 17% decline. A similar decline was registered in the number of successful deals, which in 1Q08 tumbled 21% YoY to 4143 from 5202 in 1Q07.
The data confirm the widely held belief that the booming property sector, which had become the driving force supporting the Cyprus economy has entered a period of slowdown. The Chairman of the Cyprus Property Developers Association, Lakis Tofarides during a briefing at the House had warned that property sales had in fact declined by 30% with Larnaca and Ayia Napa areas the worst affected, while Nicosia was faring better, as its mostly supported by locals. The influx of Russian buyers had in part cushioned the impact in Limassol, while results in Paphos were mixed.
A slowdown in the property sector is certain to have a dire impact on state finances, which in recent years on the back of a booming property sector have shown an incredible improvement, moving from constant deficits into a surplus.
The fiscal surplus of Cyprus in 2007 stood at EUR 250.6 mln (CYP 146.7m) vs. a fiscal deficit of EUR 212.7 mln (CYP 124.5m) in 2006, according to data compiled by the Financial Mirror.
The reversal in deficit was the result of higher direct (EUR 2.23bln: +42% YoY) and
indirect taxes (EUR 2.92bln: +19.5% YoY). Total revenues in 2007 reached EUR 6.88 bln (CYP 4.03bn) recording an increase of 10% YoY, whilst total expenditures were up by just 3% YoY to EUR 6.62bn (CYP 3.88bn).
In the first quarter of 2008, the capital gains revenue declined by 5% to EUR 90.9 mln from EUR 96 mln in 1Q07.