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Study: Stagnation in property market after solution

24/03/2004 11:46
According to the new study of the Real Estate Agents Association released by StockWatch on Wednesday, the solution of the Cyprus issue will lead to the stagnation of the island’s property market. Real estate agents anticipate, however, that this will be temporary, since after the price offsetting between the two constituent states by 2007, a new round of upward trends will start until 2010.

Sharp increases

The study refers to the upward trend in the Cyprus market for the past two years, with most properties (except for the agricultural) showing a sharp increase. Specifically, housing properties recorded the sharpest increase of 34-38% in the past few years, followed by the industrial properties (18%), the trading properties (8-16%) and the stock-farm properties (5%).

The former study of the Association which covered the two-year period until June 30, 2004, revealed that there was a drop in all categories, except the housing property. Since then, there has been an increasing demand in trading and industrial properties.

Solution and non-solution scenarios

In case no settlement will be reached, the price hike in properties will continue. “The annual increase for the next two years will reach 12-20% for the housing, trading and industrial properties. The remaining sectors will be stabilized”, Chairman of the Real Estate Agents Association, Solomon Kourouklides said.

A possible solution of the Cyprus issue, however, will cease the upward trends in the property market. The housing properties are expected to drop, mostly due to “the return of a large number of refugees who currently live in the free territories”. “The transfer of the refugees will create an increased offer, which will either stabilize or reduce the price of the housing units”, the study reported.

This stagnation will probably last until the price offsetting between the G/C and the T/C constituent states by 2007, when a new upward trend will start. The increased demand from Europe, the return of the emigrants and the climate of security and euphoria on the island will contribute heavily to the new round of price hikes in the property market.

This, however, will largely depend on the final parameters of the Annan plan. According to the study, the two parameters that will affect the Cyprus market are the timetable for the return of the refugees and the payment of compensations.