The number of finalised purchase contracts and transfers of ownership for flats increased by 30.3% to 1,948 from 1,495 over the period, according to figures from consultants Cyprus Economic Intelligence (CEI) released this week. Flats and houses accounted for 72% of activity, land for 24% and commercial and other transactions for 4%. Limassol was the hub of the action.
“Developers were forced to decrease prices in order to sell anything; the general atmosphere in the market was negative and there was an oversupply of residentialprojects,” Pavlos Loizou, a managing partner in CEI, told the Cyprus Weekly.
“2013 was a very bad year for the real estate market, a year where the Cyprus economy collapsed, and many people decided to wait it out and see what would happen next,” he added.
The median price for an apartment fell 7.2% to €107,500 from January to September 2014 from €115,850 over the same period in 2013. Comparing the July-September periods for both years, prices fell by 2.5% from €118,000 to €115,000.
There was more activity at the high end of the market, where prices rose by 41% from a median €166,634 in the first quarter to €235,000 in the third quarter. A large number of high value transactions from April to September caused the jump. These were probably related to government incentives for multi-entry visas and naturalisation, according to CEI.
Real estate activity also got a boost from banks offering slightly better financing options and easing restrictions on capital flow.
Cyprus has been in recession since mid-2011 and required a €10 billion financial lifeline from the European Union and the IMF in 2013 to stave off bankruptcy. Authorities then imposed capital controls to prevent a run on banks. Domestic controls have since been fully lifted, but vetting is still required for large bank remittances overseas.
Authorities and international lenders have said they expect tepid growth of 0.4 to 0.5% this year after an estimated 2.8% slump in 2014. But some analysts are saying that economic woes in Russia – whose business is estimated to make up about 10% of the Cypriot economy – could keep the island in recession for longer.