The Cyprus Government coffers are in dire trouble as a result of the crash in property sales.
Figures released by the Inland Revenue Department on Tuesday show that Capital Gains Tax revenues in January and February this year crashed to €9.6 million from the €57 million over the same period last year; a fall of more than 83%.
The reduction in Capital Gains Tax revenues is considerably higher than the 68% drop in property sales, confirming the fact that property prices in Cyprus are continuing to fall.
And falling property prices may continue according to recent research carried out by the Economic Research and Planning Department of Marfin Laiki Bank. More than half the Cypriots who responded to its Cyprobarometer-2008 survey believe that property prices will fall over the next 1-2 years.
The Finance Ministry estimates that the slump in the Cyprus property market will overturn the 0.5% GDP surplus and result in a general slowdown in the economy.
