By George Mouskides
SINCE the middle of 2008 real estate prices have taken a plunge, although about six months ago the process stabilised.
It is expected that prices will remain unchanged during 2016. No projections beyond that can be made as a lot of unknowns affecting prices come into the equation.
The volume of transactions hit rock bottom in 2013, reaching a low of 3,767, compared to the record year of 2007 with 21,245 sales.
2014 and 2015 recorded increases of 20 per cent and 9 per cent respectively, reaching sales of 4,952 in 2015.
The upward trend is expected to continue in 2016 and is estimated to be anywhere between a 10 and 15 per cent increase.
A sales volume in the real estate sector during a ‘normal’ year should amount to about 10,000-12,000 transactions.
Based on the above it is easily understood that we have some distance to cover to arrive at a normalised market but the prospects are positive.
Despite the above facts and figures we now have the sellers arguing that market conditions have suddenly improved immensely and higher asking prices are justified.
Buyers at the same time opt to walk down the pessimism path, indicating that the economic crisis is still to hit bottom and prices will further decline.
It is clear that the two groups live and operate in two different and distant worlds and will never achieve what both should be aiming for, that is set up and finalise a property transaction.
There are a lot of indications that the real estate market will grow at a slow but steady pace. It will also probably be below the normal volume of transactions and prices for a while.
There are of course factors which may affect these projections. Namely, the progress of settling non-performing loans and foreclosures, rate of new bank loans, economic growth, unemployment rates, buyers’ psychology and many more.
These are unknowns which could shift the market either way.
The possibility of a solution to the Cyprus problem was not mentioned on purpose; as such a development would generate a whole new dynamic for the real estate sector.
Summing up, we would expect that prices will remain stable for a period of time while sales are expected to gradually rise but remain below normal levels for quite some time. Both sellers and buyers should exercise common sense and evaluate all factors in their true dimensions rather than being led into making wrong decisions either by over-optimism or over-pessimism.
George Mouskides is General Manager, FOX Smart Estate Agency and Chairman of the Cyprus Association of Property Owners