The number of property transactions carried out at district offices of the department of Lands and Surveys in March rose an annual 19 per cent to 539, after rising 54 per cent the month before, the department said.
In the first quarter of the year, after a law came into effect exempting property transactions that are part of loan restructurings from capital gains taxation, transactions rose 24 per cent to 1,367 compared to the respective period of 2015, the department said in a statement on its website on Thursday. Demand for property received a boost from abroad, as the number of foreign property buyers rose 38 per cent in March to 62, and 46 per cent in January to March to 169.
Most property transactions in March were completed in Limassol and their number rose an annual 23 per cent to 197, followed by Larnaca and Paphos with 121 and 106, which rose 23 per cent and 13 per cent respectively, the department said. The number of transactions in Nicosia fell 1 per cent to 82, while those in the Famagusta district almost doubled to 33.
In July the parliament approved tax breaks exempting property buyers from capital gains tax and slashing transfer fees.
Barret Kupelian, a UK-based Cypriot economist, said that the increase in transactions may not automatically translate into the stabilisation of property prices, which have been declining in the past seven years.
“The European Commission estimates the unsold stock of housing to be in the region of 50,000 units,” Kupelian said. “This suggests that spare capacity still exists in the market, which could be reflected in future, lower, prices”.
According to the Central Bank of Cyprus’s property price index, residential properties lost 29 per cent of their value in the fourth quarter of 2015 compared with the respective quarter of 2008. According to the Royal Institute of Chartered Surveyors, commercial properties lost around 40 per cent of their value since 2009.
While property prices showed first tentative signs of stabilisation in 2015, available housing stock is further expected to increase. According to Cystat, in 2015 local authorities issued building permits for 3,197 housing projects, 12 per cent more compared with 2014. Last year, the overall construction area of residential and non-residential projects, which received a building permit from local authorities also rose 12 per compared with 2014.
In the first three months of 2015, construction activity picked up considerably, as shown by official statistics on cement sales which rose 30 per cent compared with the respective quarter of 2015.