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Data recently published in the Cypriot media, show us what’s already happened in the last four months, that is real estate sales have decreased by 6.6 %, but what lies ahead?
The geopolitical political situation may be in turmoil, sales may have recently slowed down, but buyers and homeowners mustn’t make any rash decisions.
I am sure many people are waiting until we know more about whether Cyprus will be free to exploit its natural resources, the naturalization scheme will remain attractive to foreign investors and if we will have a political deal with the Turkish Cypriots, but it’s tough putting your life on hold for unknown factors.
Recent sales drops in some regions do not necessarily mean that it’s becoming more of a buyers’ market, so you might be able to get a good deal.
Besides, buying a property should generally be regarded as a long-term investment and, even if there is a short-term price drop, house prices will probably stabilize in the future.
Mortgage rates are incredibly low right now and many will want to fix into a low rate to give themselves security as we move into a period of uncertainty.
But don’t just jump into a fixed rate without considering the alternatives – there are plenty of flexible products that would leave your options to remortgage open if rates did start to change. Brexit is still a complete unknown on how it will affect Cyprus.
We’ve definitely seen a cooling of the market over the last year in areas such as Limassol, and this has spread to other areas over the last few months.
Buyers have held back in the hope that prices will fall, but as this hasn’t materialized across the board, they’re starting to come back into the market.
The difficulty now is a lack of properties for sale, as people are again considering that a house is a good investment and for own use, it offers a sense of quality and prosperity.
I don’t think buyers should be put off by fears of a house price downturn as long as they mitigate the risks.
If you bought a property now, even if it did drop in value in the short term, the market would probably have corrected itself by the time you wanted to move (assuming you stayed there for at least five years). However, if you’re considering buying somewhere for the short term it’s more complicated. Transactions are likely to stabilize towards the end of next year.
In terms of buy-to-let, demand from landlords has already increased and many are now holding on to their investment.
We are now seeing rent rises as a result. With property deals available and rents on the rise, now isn’t a bad time to be a landlord as long as you really understand your objectives and whether the deal stacks up both now and in the long run.
Some buyers and sellers are putting their plans on hold. Recent data and comments about the Real Estate Market, are undoubtedly causing uncertainty in the housing market, which in turn affects sentiment and decision-making, and we’re seeing both buyers and sellers put their plans on hold as a result.
Recent research from DANOS, suggests that house prices could fall by more than 5% if there are factors (as mentioned above) which won’t help consumer confidence.
Once the current political impasse is resolved and it’s clear how and when we’ll be exploring the oil and gas resources, we hope there will be a degree of certainty which may trigger a flurry of activity.
We hope this certainty is provided sooner rather than later.
It is still too early to predict what impact a Cyprus solution or no solution will have on property values. A weakening of the appeal of Cyprus investment could drive prices down or strengthening of certainty could drive up interest in the real estate sector.
At this stage, we simply don’t know. On a day-to-day level, changes to naturalization policy could reduce demand from those foreigners investing in Cyprus, but landlords with established, well-capitalized portfolios will likely fare reasonably well.
However, those heavily reliant on finance may find uncertain conditions more troubling.
