THE ASKING price for many properties in Paphos has plummeted by at least 25 per cent in the last 18 months, yet few are being sold apart from those regarded as “real bargains”, experts say.
The rental market is faring no better and industry professionals are divided over when the situation will improve.
Natalie Alexiou, who has been in the real estate business for 30 years, says she has never seen the market as depressed as it is now, with prices falling by so much and so swiftly.
“A villa which would have previously sold for €450,000 is now going for €300,000, and an apartment priced at €125,000 is now selling for €80,000,” she said. “And this has all happened in the last year-and-a-half.”
Experts blame a host of interwoven factors for the stagnant market, ranging from the global recession to the Title Deeds fiasco and local banks imposing stricter lending terms for property purchases.
Banks have cut housing loans by 50%
A bank manager in Paphos told the Sunday Mail that banks have cut the number of housing loans by about 50 per cent. “Even if there is a demand to buy, banks are afraid to lend and try to avoid it,” he said.
“There doesn’t seem to be any good news for the housing market in Paphos.”
People have become a little too greedy
In some instances, prices in Paphos had simply been too high before the fall, experts believe. “People had become a little too greedy,” Alexiou said.
A correction in the overheated market was seemingly inevitable. But its depth and scale – reflected by the forest of ‘For Sale’ signs in the hillside villages around Paphos – was largely unforeseen.
Some experts, however, are relatively optimistic, among them George Mais, the president of the Paphos branch of Cyprus’ Land and Building Developers’ Association. He agreed with Alexiou that prices have dropped in some areas of Paphos and especially in the re-sale market.
“Some properties or locations just aren’t popular any more,” he said.
Russian buyers are leading the way
But new properties and those near the sea or with good views seem to be holding their value, he added. And he sees signs that the Paphos market is finally picking up, with Russian buyers leading the way.
They are choosing Paphos “because it is quiet, there are many areas of outstanding natural beauty and it’s safer than a lot of other towns in Cyprus,” he said.
Mais also argued that some Britons desperate to sell and repatriate their money are not necessarily sustaining a loss because they bought when sterling was strong. So even if they sell their property for less than they paid for it, they are still “coming away with something”, he said.
Alexiou, however, is doubtful that Russian buyers are having much impact. “They are mainly purchasing in Limassol,” she said.
Pontians are buying at the lower end of the market
Members of Paphos’ large Pontian community are buying some properties, but at the lower end of the market. “They are making very low offers on the cheapest properties and some vendors are selling because they are desperate,” Alexiou said.
Her buyers, as with most estate agents in Paphos, used to be mainly British. More recently, they have been “Cypriots with a nest egg” taking advantage of discount prices as “an investment”.
Two years ago, Alexiou was selling at least one property a month to a British buyer. No more. The last house she sold for a British client was three months ago in the upmarket village of Kamares. The asking price was €400,000 but a Cypriot buyer snapped it up for 300,000.
“It belonged to an elderly couple who wanted to go back to the UK as they were getting older and wanted to be close to family, especially their grandchildren. This happens in a lot of cases.”
Some, desperate to sell, try to rent their property if they find no buyers. But the rental market is equally in the doldrums. “A villa which previously rented for €800 a month now gets about €500,” Alexiou said.
She believes these lean times will have at least one positive outcome.
Survival
A “survival of the fittest” in the industry will help weed out what she calls the ‘cowboys’ – developers and estate agents who are operating without a licence.
“We [estate agents] also have to try and co-operate with each other more, drop house prices and be flexible with our fees,” she added.
Tourism may bolster the market this summer
Some also hope that the significantly improved outlook for tourism this summer may bolster the property market: many current home owners in Paphos are former holiday-makers whose visits encouraged them to buy for retirement or leisure purposes.
Cyprus’ revenue from tourism was up 53.5% in April compared to the same month last year, according to official figures published last week.
People won’t buy properties without Title Deeds
Mais, meanwhile, hopes that new legislation passed last year will soon resolve the Title Deeds problem. “People can’t and won’t buy without them,” he said.
Hundreds of properties for sale in Paphos have yet to be issued with Title Deeds, a problem that has contributed to the drop in the number of house sales, especially in the case of new properties.
Mais also believes that a concerted drive to get going on proposed infrastructure projects for the Paphos area will help the market. “And we must increase the quality of our services,” he said. “I hope things will get better in the next few months.”
Alexiou remains sceptical. She was at a recent conference in Paphos of the International Real Estate Federation, FIABCI, where there was little cheer from guest speakers.
“They said it would be at least a year before any improvement would be seen in the Paphos real estate market, and even then it would only move at a snail’s pace.”
Combined Meetings of Creditors
