New Cyprus property index - help or hindrance?

The Royal Institution of Chartered Surveyors has just launched a RICS index for Cyprus. The Index has been designed to track property and rental prices and monitor changes in residential (apartments and houses), offices, high street retail, and warehouses. The data is focused on 5 main urban areas in Cyprus.

Whilst this is welcome news, as indices always aid the transparency of a market, does it fundementally affect the situation for the property market in Cyprus?

In Cyprus, for those of you who follow the latest developments, there are other challenges that have been in the press recently like:

The North Turkish, southern Cypriot divide

The divided country has raised issues with “refugee estates” as the latest Oram ruling indicates. The Orams bought a £160,000 holiday home in Lapithos, an area of Cyprus that has been occupied by Turkish troops since 1974. A Cypriot court ordered them to raze the property, return the land and pay damages to Meletis Apostolides, who was one of thousands of Greek Cypriots who fled his home when Turkey invaded. The latest appeal to the UK Court of Appeal upheld the previous Cypriot ruling, that the house must be demolished. This means anyone wanting to buy in Northern Cyprus, should take care. The only country that recognises TRNC (Turkish Republic of Northern Cyprus), is Turkey, the Greeks don't and neither does any other country to date.

Lack of transparency over title deeds.

Although there are meant to be legislative moves afoot to address this, it is questionable whether they will go all the way to fundamentally reforming the way the process works. The buying process, (between the local Planning Offices and Land Registry Offices) in Cyprus means that developers do not always hand over Title Deeds to the new owner, immediately on purchase. This has allowed scope for some unscrupulous developers to take out further loans secured against the same property, or sell the property for a second time. The length of time it takes to transfer title deeds – in some cases years - provides scope for this to happen. Although it does help dealing with a reputable developer.

Cyprus has witnessed a slowing of the property market, as has been the case with many other markets around the world, although it does not seem to have suffered as badly as many countries, with declines estimated to be in single digits, rather than some of the more dramatic declines seen in the UK and elsewhere.

An index in itself does not address these problems. It helps understanding that an average apartment (2 bed, 85 sqm) is most expensive in Larnaca - at €187,590 - and an average house (3 bed with garden, semi-detached, 250 sqm) is most expensive in Nicosia - at €523,438 - but an index in itself doesn't ease all the challenges of a housing market. It will help create greater levels of transparency for the market, and in turn, possibly some confidence in investing there. After all, other countries like Spain, have official housing statistics, but that hasn’t solved all its housing challenges, some of which are structural and fundamental e.g. the inbalance in supply and demand.

^{NB: map courtesy of Lonely Planet} 

^{Louise Reynolds}

^{Posted 18th February '10} 

Property Venture^® is an independent, UK-based agent. We help time-strapped investors and holiday home purchasers, buy abroad by guiding through the buying process, so reducing the hassle. We visit the countries you buy in, so we can offer common-sense, grounded advice. Overseas members of NAEA. This means we have been subjected to the membership criteria and have signed up to follow the professional Code of Conduct established to help you, the potential buyer or investor, buy property with confidence