Cypriot property prices to bottom out in 2016

Photo: Senza Senso

Experts predict prices of property in Cyprus will bottom out in 2016.

A report by Resolute Asset Management forecasts that prices will reach a trough in the first half of 2016. Indeed, property prices have been falling steadily since the financial crisis, with values significantly lower than the previous market peaks. According to the RICS, even the most resilient property type (residential homes) have fallen 30 per cent since 2009, with prices down 4 per cent last year compared to 2014.

The rate of decline, though, is slowing down, with both the Cyprus Central Bank and RICS indices showing signs of stabilisation in Q3 2015, as prices dipped by under 0.5 per cent by each measure.

The optimistic outlook is encouraged by RAM's report, which found that sales climbed around 9 per cent in the first 11 months of 2015 compared to the same period in 2014. This is still 79 per cent below 2007 levels, though, with sales forecast to remain "at low levels".

However, there are also indications that foreign buyers are beginning to consider the island once more as a potential place to purchase property. Indeed, last year, the weak euro compared to the pound and dollar drew many buyers back to Europe, as some countries began to distance themselves from the spectre of recession.

In November 2015, Cypriot property received its highest number of enquiries in 34 months on TheMoveChannel.com, re-entering the portal's Top 10 countries for the first time in eight months. While the country then fell to 28th place in the chart in December, indicating the uneven pace of recovery, overall enquiries in Q4 2015 nonetheless rose 36 per cent from Q3 2015.

The positive uptick is echoed by statistics from the Department of Lands and Surveys, which shows that sales rose 21 per cent in November 2015 year-on-year. While the majority went to domestic buyers, sales to overseas buyers surged 48 per cent year-on-year. Once the market has officially bottomed out and prices begin to show stable signs of increasing, buyers may begin to return in more significant numbers.

Resolution Asset Management forecasts that international investors will focus almost entirely on expensive property, so that they meet the €300,000 threshold for the country's residency visas.