FIGURES published yesterday by the Department of Lands & Surveys show that the number of property contracts deposited at Land Registries throughout Cyprus in May 2011 was 697 compared with the 803 deposited in May last year; a fall of 13%.
Although this fall is less than previous months, property sales have been falling steadily for the past eleven months with no signs of a much-needed recovery on the horizon.
During the first five months of 2011 property sales are down by nearly 16% compared with last year and are now just 5% higher than the number sold during the first five months of 2009, which was the poorest year for sales since 2002.
With the exception of Limassol, where sales in May were up nearly 37%, sales were down in all areas. Nicosia and Paphos saw sales falling by 33.2% and 32.9% respectively, while sales in Larnaca fell by 26.2% and those in Famagusta fell by 13.6%.
The sharp contraction in demand has left thousands of unsold properties built in the last three years littering the landscape and many partly completed projects have been mothballed.
The economic situation in Cyprus is not helping the property market.
Unemployment reached 7.6% in April, the highest rate increase over the past year boosting fears that it will take longer for the gradual recovery in the economy to impact the labour market. Young people face the biggest unemployment problem with 1 in 5 of the under 25s out of work.
The Island’s inflation hit a 29-month high in May. The Cyprus Statistical Service reported that inflation in May 2011 stood at 3.88% up from 3.28% in April 2011 and 1.61% in May 2010. This is the highest increase since October 2008.
While interest rates and property prices remain high, the outlook for domestic sales is not promising. If sales do not improve, 2011 could prove to be a worse year than 2009.
Overseas sales
Unlike domestic demand, foreign demand for property continues to improve. Property sales to foreign buyers increased in May with a total of 187 contacts in favour of foreigners being deposited compared with 154 in May 2010; a rise of 21%.
With the exception of Paphos, where sales in May fell 38% compared with last year, sales are up in all areas. Nicosia led the way with sales up by 86% followed by Famagusta (+71%), Limassol (+ 49%) and Larnaca (+21%).
During the first five months of 2011 property sales to foreigners are up 17% on last year’s figures.
