Foreign sales of cypriot property up 59pc

Paphos, Cyprus Photo: Sergey Yeliseev

The number of foreign sales of Cypriot property has risen by 59 per cent in the past year. New figures reveals that transactions have jumped in 2015, but what challenges does the island's housing market still face?

Sales to both foreign and domestic buyers rose in all districts apart from Nicosia in July, with Famagusta leading the way: sales were up 96 per cent, accordng to the figures. Sales increased 32 per cent, 30 per cent, and 12 per cent in Larnaca, Paphos and Limassol respectively.

71 per cent of the total contracts registered in July were deposited by domestic buyers, while 29 per cent were from overseas buyers.

Indeed, sales to non-resident buyers jumped 59 per cent year-on-year in July, rising from 92 to 146. Sales rose in all districts apart from Famagusta and Nicosia. Paphos led the way with sales increasing 200 per cent year-on-year, followed by Larnaca (119 per cent) and Limassol (3 per cent).

The figures from the Department of Lands Surveys mark a continuing trend in what has proven a positive year for Cyprus: during the first seven months of 2015, property sales to overseas buyers have risen 13 per cent compared to the same period last year.

The positive sentiment arrives hot on the heels of several important steps from the government to improve the market, from the reduction of Property Transfer Fees to efforts to issue title deeds to those who were not issued them by dodgy developers.

At the same time, after 14 consecutive quarters of economic recession, GDP grew by 0.2 per cent year-on-year in the first quarter of 2015. In the real estate sector, meanwhile, both the total deeds and transfers of sale registered at the DLS increased by 7 per cent and 2.9 per cent year-on-year respectively in the first half of 2015.

But the island's economy and housing is far from back to normal. A new study from Ernst & Young Cyprus outlines the number of obstacles on the path to recovery. The agency highlights the positive steps taken with regards to foreclosure legislation and property taxation, but notes the headwinds still facing the country.

The contribution of the construction and real estate sectors to Cyprus' GDP continued its decrease in the first quarter of the year, albeit at slower rates. At the same time, investment in the construction sector remained weak (€306.1m or 7.1 per cent of GDP), down by €23m compared to the previous year.

Unemployment remains a major problem for both the real estate industry and the wider economy: during the first half of the year, there were on average 45,247 registered unemployed persons in Cyprus, of which 12.5 per cent (5,623 persons) were attributed to the construction sector.

Average real estate prices have also decreased over the past year for all types of properties and the same trend is evident in the average rents. Nonetheless, interest from overseas buyers is returning: Cyprus climbed three places in the TheMoveChannel.com's Top of the Props rankings to become the 17th most popular destination on the site in June 2015.