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European house price boom ‘is over’

Alan Lawton
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The great European house price boom ended in 2007 according to a new report predicting storm clouds on the horizon for the Continent’s property markets.

Only Cyprus and Iceland saw house prices outstrip the previous year’s performance, according to the Royal Institution of Chartered Surveyors report, which called the end of the property goldrush.

Report author Michael Ball said: “2007 will probably go down in history as the year that the great European house price boom ended.

The year started so strongly on a wave of optimism but ended bleakly for housing markets in virtually every country.

Purchasers could no longer afford to buy at ever-rising interest rates. Housing markets either froze as a result or prices started to slide.”

Poland saw the fastest rising house prices with 28% inflation last year, but the report warned the country’s prospects had shifted sharply to downbeat in the second half of the year

Former boom nation Ireland was the worst performing European country with house prices falling 7% last year, while the previously strong performing Baltic states were also hit hard.

Professor Ball, of the Department of Real Estate and planning at the University of Reading, said that while the credit crunch had been widely blamed for the property slowdown, its effects were still not being seen fully.

Instead, rising interest rates and affordability finally reaching breaking point were responsible for the shift in mood that brought an ‘autumn chill’ and ‘winter stagnation’ to the UK and other markets.

“The finger of blame has been pointed at the worldwide credit crunch in existence from summer onwards,” says Prof Ball.

“However, the most important factor was probably the more prosaic one of rising interest rates. Interest rate responses by monetary authorities and capital markets responses to concerns about escalating general price inflation brought the housing boom to an end.

A common event in European housing market history of inflation-induced increases in interest rates was being acted out once again, although on a much smaller scale than in previous downturns. This gives optimism that the current ‘correction’ will not be too great.”

Property developers move in

Jacqueline Theodoulou
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LAND developers are showing an interest in the Pyrgos Tylliria area, now that the prospect of the Limnitis checkpoint opening appears firmly on the agenda.

Citing sources yesterday, Phileleftheros newspaper claimed that

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Housing loans surge

Nigel Howarth
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According to the Central Bank Monetary Review, credit growth in January 2008 stood at 33.48%, higher than February 2007.

The total value of loans granted in the first month of the year stood at €42.19 billion from €31.6 billion in January 2007.

This increase of €10.58 billion stems from loans to non-financial organizations and the housing loans.

The loans to non-financial organizations climbed 43.5% to €19.87 billion from €13.85 billion in January 2007.

The housing loans surged 37.6% to €8.26 billion from €6 billion in January 2007, while consumer loans rose 9% to €6.59 billion from €6.04 billion.

Top 10 property contract clauses

Louise Zambartas
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When you instruct a lawyer in Cyprus you trust them to include everything that needs to be included in the contract purchasing the property to protect you. Sometimes it is only when things go wrong that you realise that something extra could have been added into the contract to protect you.

As a non-specialist it can be very difficult to know which clauses need to be in the contract. Here are my top ten clauses that your lawyer should be trying to get in:

1 – A clause stating that the builder will build the property according to the law and the planning permit and building license

If the Property is not built according to the construction laws and regulations and the permit, the separate title can not be issued and transferred into your name!

2 – A clause stating that the builder will take all necessary steps to get final approval of construction from the authorities.

Once again – without this in place – title cannot be transferred to you. It is essential the builder takes this step.

3 – A clause guaranteeing the property

The Builder should give you a guarantee regarding the good workmanship of the property as well as a clause giving a guarantee against structural defects. The length of time these guarantees lasts for will vary from builder to builder – but you need to know your lawyer is pushing for the maximum that developer will give.

4 – A clause guaranteeing that by the completion date the property and project will be substantially completed

You have not purchased your dream home and spent all of that money to be stuck in the middle of a building site – or worse still – in an unfinished home.

5 – A clause declaring that by completion or transfer the property will be mortgage free

By the time you pay the final instalment on the house or take the Title Deeds, you need to know there will be no mortgages, charges or encumbrances over the Property.

6 – A clause stipulating the prices of any extras

The contract needs to be very clear on what exactly is included in the purchase price. If there are additional extras you may want to request – the price of these needs to be set when you sign your contract – whilst you still have the bargaining power!!

7 – A clause to cover late delivery

It is very upsetting for most buyers if they are told that the property is going to be delivered late- however, it is some consolation if you know that your contract states a clear and fair rate of compensation as agreed damages.

8 – A clause to cover cancellation and resale

Your contract needs a clause in it to say that if (in between depositing the contract at the Land Registry and transfer of title into your name) you wish to sell the property (through a method known as a cancellation agreement) then the builder will be obliged to sign the paperwork and if he is going to charge for this – the cost needs to be set in the contract. This is one of the biggest traps purchasers in Cyprus fall into – be sure your lawyer covers this point.

9 – A clause to allow inspection by an independent surveyor before delivery is accepted

An Independent Surveyor can confirm that the property has been substantially completed and can also prepare the snagging list as mentioned below.

10 – A clause stipulating money is held back until a snagging list is prepared

Any new build property is going to have some little issues when you initially move in – and most people expect this. However, you need to know that these are going to be sorted out promptly and efficiently so that you can enjoy your new home to the full extent as fast as possible. Withholding a small sum at this stage can give a real incentive to get the snagging list sorted as soon as possible!

Of course, there are many important clauses to be included in a contract when you buy something as important and expensive as a property – however, as a minimum your lawyer should be insisting on inclusion of the above clauses for you where relevant.

By Louise Zambartas LLB (Hons) Law

Louise is a dual qualified practising English Solicitor and Cyprus Advocate and has established The Law Offices of Louise Zambartas; she lives and works in Limassol. I am grateful to Louise for allowing me to publish her article; I urge all Cyprus property buyers to follow her sound advice.

Over the coming weeks, I’ll be publishing more hints and tips by Louise. In the next one, she’ll be giving us her top legal tips on pitfalls to avoid when buying property in Cyprus.

The Law Office of Louise Zambartas is a specialist team of Cyprus Property Lawyers comprising English Solicitors and Cyprus Barristers dedicated to dealing with conveyancing in Cyprus and associated legal work.

Chasing out the Cowboys

Liz Rowlinson
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Investing in property abroad? Good news – there’s a new watchdog protecting you from the market’s rip-off merchants.

We can spend months planning our summer holiday abroad but, incredibly, few of us spend enough time doing our homework when we are shopping around for a foreign home.

It’s a staggering fact that when we buy overseas – which British investors spent a whopping 20 billion pounds doing last year – we take fewer precautions than we do when purchasing a home in the UK. And yet it is likely that 90 per cent of the problems which result from this lack of judgement could be avoided if people did one simple thing: use independent legal advice on any prospective purchase.

AIPP LogoIt is this simply safety net – which clarifies issues of ownership – that (AIPP), now celebrating its first birthday, has been impressing on consumers over the past year. “We don’t claim to be able to solve everything, but I just want to raise enough awareness to stop people making silly errors when buying overseas property,” says Paul Owen, their chief executive.

The AIPP was launched last March to provide a kite-mark for the overseas property industry. It is a non-profit organisation, now with 184 members (together employing 2,900 staff) who have all voluntarily signed up to a single code of conduct.

By providing accountability and transparency for consumers, it hopes to emulate bodies such as the Association of British Travel Agents (ABTA), which represents more than 80 per cent of UK travel agents and operators.

Owen says: “At the end of our first year, I cannot emphasise enough the following three things:

  • you must get decent legal advice,
  • you must question all promises of profits and rental yields,
  • and you must never buy more than you can afford.

“The last point may sound obvious but it worries me that more and more people are putting all their money into one asset instead of spreading the risk. Find out exactly how much you are realistically going to get rather than take ludicrous promises at face value. If you are told that prices are going up by X per cent a year, ask why? Are promised rises due to economic realities that you can verify or are they just the developer’s hopeful projections?”

Martin Gow, head of International Group Development at Parador, a founder member, echoes this. “We hear all too often of customers complaining about the hard sell sales techniques of other companies. You can shatter people’s dreams by selling them promises you can’t fulfil – and these irresponsible companies are dragging down our industry.

“I think all major overseas companies should join up but sadly many big players don’t have the quality controls to live up to the high standards demanded by the AIPP code. It’s a very proactive body, not just an old boys’ network of backslappers.”

Owen reports 35 official complaints in the first year and compensation cases have been launched as a result of many of them. He has also persuaded the first bank to become a member, Nat West. While Nat West doesn’t sell properties, it does provide finance, legal advise and valuations in Spain where it has a network of representatives.

Darren Fretwell, of Nat West’s International Mortgages sector says, “We are proud to be the first bank to join the AIPP. More and more people want to buy properties abroad and dealing with a member of the AIPP makes the process easier, giving investors guidance and confidence when buying their overseas dream home.”

Article by Liz Rowlinson of the Daily Mail

 

Caution

I have seen one Cyprus property developer deliberately misleading people into believing they are members of AIPP by displaying the AIPP logo on their website.

Please ensure you check out all such claims, do not take them at their face value.

The sky’s the limit

Anna Hassapi
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THE RISE in real estate prices, coupled with an unprecedented development boom, have been established as an entrenched reality in Cyprus over recent years.

Limassol is currently host to numerous exclusive residential projects, including a project marketed as “the most exclusive in the Mediterranean”, offering accommodation for sale up to a staggering €12.5 million.

The Residence, is a development comprising 57 luxury properties, located on a blue-flag beach, right opposite the yachting marina of St Raphael five-star resort in Limassol. The project is a partnership between development company Solon Piitarides Developments Ltd and UK-based architects Scott Brownrigg. It is scheduled for completion by March 2009.

“This residential development is definitely the most exclusive in Cyprus, even in the whole Mediterranean,” said George Englezos, Sales Executive for The Residence.

“There are infinite features that set this project apart from anything else. The architect is world-famous Scott Brownrigg. The specifications are also superior. We have used the highest standard in technology and in materials. Its location on the beach and next to the marina is advantageous. And this area is presently considered the best area in Limassol,” Englezos said.

The 57 properties offered in the Residence include 12 villas, as well as two-, three- and five-bedroom apartments. The prices start from half a million for a flat, to €12.5million for a villa. “Prices are in fact negotiable and do change,” noted Englezos.

Nine of the twelve villas on offer have already been sold, Englezos confirmed. “We now have three villas available for sale: one is priced at €12.5million, the second for €11.5million and the third for €6.5million,” he said.

In fact, Englezos confirmed that 70 per cent of the properties in the Residence have already been sold. “We have targeted all the markets, including Lebanon, the UK, Russia and Germany. Cypriots have also bought some of the smaller flats, as an investment,” he explained.

Passing the seafront road from Amathus to Limassol centre, one cannot but notice the overwhelming concentration of developers’ sales offices along the road, as well as the numerous projects under construction. Virginia Beach Villas, Savoya Residences, Olympic Residence, as well as Cybarco’s ‘crown-jewel’ Amathusa Coastal Heights, are just some of the developments currently in progress.

Cybarco’s Amathusa, located on a seafront slope right next to the Amathus ancient site, is a residential community comprising 248 units in villas, flats, town houses and other types of accommodation. The ‘lifestyle community’ features two large swimming pools, parks and a gym, while walking path-lanes have been incorporated in the project.

“Built on a 28-metre slope, Amathusa offers superior sea views to all its residents,” said Angelos Markou, Amathusa Sales Executive. “Prices are also reasonable, for example €341,000 for a two-bedroom flat, and €870,000 for a courtyard villa, always with the Cybarco quality” he said.

The supply is definitely endless, and there also seems to be enough demand. “There were many occasions when I sold multi-million villas to clients in Limassol,” one real estate agent told the Sunday Mail.

“These are not your usual homes, definitely not the houses we Cypriots are now living in. We are talking about 600-700m², multi-storey villas, right on the sea, sitting on 1,000m² of land. They also have the facilities and amenities to go with the size,” he explained.

“We do have many luxury superior properties on offer, including villas at advantageous spots, roof garden luxury apartments on the beach and so on. Our clients mostly come from ex-Soviet states,” a major developer’s sales person said.

“There is clearly a difference between the type of people who invest in property in Paphos and those who invest in Limassol. Russians do prefer Limassol because of the lifestyle and the services. Limassol is a business centre, offers a pleasant lifestyle and a number of excellent private schools,” she explained.

Copyright © Cyprus Mail 2008

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