21/05/2004 13:11
According to a Cypronetwork survey released on Friday, the confidence in the constructions sector has dropped 9 points to +8 points, the lowest level for the past 12 months.
Property consultant, Andreas Andreou said that this is mostly attributable to the disappointment from the increase in the cost of the construction materials. It is noted that the survey had been carried out in early April, before the approval of the bill on the VAT on properties and the increase in interest rates.
Despite the fact that the citizens’ plans for the construction or purchase of a property are not largely affected by the latest developments, Mr. Andreou anticipates that citizens will turn to the renting rather than the purchase of properties. “This is attributable to the fact that there will be no sufficient purchasing power by the consumers due to the imposition of VAT, the higher interest rates and the increased construction cost. These factors will affect demand even for the higher middle class”.
Mr. Andreou also said that the high increase in the price of properties in certain regions (such as Paphos) has made several foreigners to sell their summer residences and proceed to the purchase of properties in regions that have maintained lower prices.
Price slump?
Economist Manolis Korakakis said that the slump in the price of properties is a result of the overheating of the property market, which led to a “bubble” in the price of properties. “The property prices in Cyprus are overvalued by 12% and the increase in interest rates will lead to a price cut in properties”, Mr. Korakakis told StockWatch.
More than that, prices will be further affected by the fact that several developers will remain exposed to banks due to the lower demand. Investors have already realized that investment returns in properties have begun to evaporate, Mr. Korakakis concluded.
Property consultant, Andreas Andreou said that this is mostly attributable to the disappointment from the increase in the cost of the construction materials. It is noted that the survey had been carried out in early April, before the approval of the bill on the VAT on properties and the increase in interest rates.
Despite the fact that the citizens’ plans for the construction or purchase of a property are not largely affected by the latest developments, Mr. Andreou anticipates that citizens will turn to the renting rather than the purchase of properties. “This is attributable to the fact that there will be no sufficient purchasing power by the consumers due to the imposition of VAT, the higher interest rates and the increased construction cost. These factors will affect demand even for the higher middle class”.
Mr. Andreou also said that the high increase in the price of properties in certain regions (such as Paphos) has made several foreigners to sell their summer residences and proceed to the purchase of properties in regions that have maintained lower prices.
Price slump?
Economist Manolis Korakakis said that the slump in the price of properties is a result of the overheating of the property market, which led to a “bubble” in the price of properties. “The property prices in Cyprus are overvalued by 12% and the increase in interest rates will lead to a price cut in properties”, Mr. Korakakis told StockWatch.
More than that, prices will be further affected by the fact that several developers will remain exposed to banks due to the lower demand. Investors have already realized that investment returns in properties have begun to evaporate, Mr. Korakakis concluded.
Related Articles
