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BY DR. PETROS SIVITANIDES
In February, real estate sales activity (as measured by the number of sales contracts) in the island’s free areas continued the rising trend that started in November 2009, according to the latest data published by the Department of Lands and Surveys. In particular, the number of sales contracts in February 2010 registered a year-on-year increase of 26.2%, following year-on-year increases of 24.5% in the previous month as well as increases of 22.3% and 1.3%, respectively, in December and November 2009. The number of sales contracts in February 2010 was 55.5% lower compared to the activity registered in February 2008, but the persistence of the rising trend over the last four months is encouraging.
The rising trend in the first months of 2010 is not surprising, given that in the fourth quarter of 2009 the year-on-year rate of reduction in the number of property sales contracts decelerated to only 5.6%, compared to a year-on-year decrease of 36.7% in the third quarter of 2009 and a 44.3% overall reduction in 2009 compared to 2008.
All Cyprus districts registered increases in real estate sales activity in February, but growth rates varied considerably across locations. In particular, Ammohostos (Famagusta) registered the largest year-on-year increase of 44.2% in property sales contracts, closely followed by Larnaca, where property sales contracts increased by 43.8%.
The smallest (but still sizable in percentage terms) increases were registered in Nicosia and Paphos where the number of property sales contracts increased on a year-on-year basis by 13.7% and 18.8%, respectively. The number of sales contracts in Limassol increased by 25% on a year-on-year basis, following a decrease of less than 1% in the previous month.
Among the five districts, only Nicosia, Larnaca and Paphos have registered consistent year-on-year increases in property sales activity over the last three months (February and January 2010, December 2009) with growth rates in excess of 12%. Property sales contracts decreased (on a year-on-year basis) in Ammohostos in December 2009 while in Limassol they posted a minor drop in January 2010.
Although the number of sales contracts is not the best indicator of overall effective demand for real estate, the continuing rising trend in this statistic can be regarded as a positive sign. However, there is still uncertainty regarding the future path of property sales in Cyprus as the Eurozone economy seems to remain fragile. According to the latest data released by Eurostat, the anemic growth rate of 0.4% that was registered in the third quarter of 2009 in the Eurozone economy decelerated to a mere 0.1% in the fourth quarter, raising significant doubts regarding economic growth in Europe in the months ahead.
Dr Petros Sivitanides is Associate Professor of Real Estate in the School of Architecture, Land and Environmental Sciences at Neapolis University in Paphos and Director of the university’s Real Estate Centre.
