Is it a good time to sell a property in Cyprus?

Is it a good time to sell a property in Cyprus?

In order to sell a home at the best possible price, the market must be experiencing an increase in demand, record sales prices, low-interest rates, and a scarcity of available properties on the market at the same time. 

All of those conditions are present in our current environment. However, it is possible that these conditions are beginning to shift. Here are three considerations that sellers in 2022 should give serious consideration to.

Supply is at an all-time low, but this is only a temporary trend.

Customers will have fewer alternatives to select from as a result of this, which will increase competition among them, ultimately leading to a higher price for your house.

According to the current situation, a shortage of supply has played a significant role in the steady price increase that has been observed this year throughout the European and Cyprus real estate markets.

This tendency, on the other hand, will not endure for long due to three factors.

Factor 1

In the first instance, when COVID-19 struck, the Cyprus government declared and extended a ban on foreclosures until the end of October 2021. Therefore, very few foreclosures have taken place, considerably fewer than is typical in this situation. 

Once a result, both covid and pre-covid pending foreclosures will take place as the process concludes. This will result in an increase in the number of available homes for sale, lower asking prices – lower values, or at the very least downward pressure on the price of the property.

Factor 2

Second, it is projected that the average monthly wages in Cyprus would show only modest improvements, which will be offset by a significant increase in the cost of living. 

The real purchasing power of the average person is expected to decline in the future years, according to some estimates. Property owners will have a greater incentive to liquidate their assets if they follow this trend rather than the alternative.

Factor 3

Third, the new building permits has dropped in 2020 for a variety of reasons. However, in 2021, and despite the exceptional rise in the cost of construction materials, it is projected that the number of permits for new residences will climb by the end of the year.

On a year-over-year basis, by around 10 percent to 15 percent. The supply of new houses is expected to expand significantly by early to mid-2022, as compared to the previous year's figures at the very minimum.

Factor 4

Finally, baby boomers (those between the ages of 58 and 75) account for a significant proportion of current property owners.

Many of those will die, move in with relatives, or intentionally need to downsize to smaller and more suitable retirement residences during the course of the next decade.

As a result, more houses than normal will be hitting the market each year as a result of the gradual increase in supply. However, it is important to note that this will result in an oversupply of smaller dwellings as a result of millennials choosing to live in smaller spaces.

Some purchasers may be priced out of the market as a result of rising interest rates and declining affordability.

Because of the ultra-low interest rates, the cost of a mortgage payment "appears" to be comparatively cheap, and the purchase of a home seems more reasonable than it would otherwise be.

However, if mortgage rates begin to rise – and it is not a question of if, but when this will occur – the number of potential purchasers will be dramatically reduced since the cost of obtaining a mortgage will rise gradually.

In the meanwhile, given the fact that real estate prices are sluggish to respond to changes in the market, prices will continue to rise, resulting in a further deterioration of home affordability. 

Although rising property prices necessitate larger down payments, many people who might otherwise be able to make mortgage payments are unable to qualify for one in the first place due to the high down payments required by these growing prices.

Together with the predicted increase in the cost of borrowing (via higher interest rates), this is expected to result in a significant fall in the number of mortgage applications submitted this year.

Factor 5

2022 can be a great time to sell your property in Cyprus. Because of the pandemic, the supply in property has dramatically decreased.

Sellers can secure a buyer faster in the current market and without negotiating much from the asking price. Of course the harsh reality is that purchasers will only be drawn to the nicest, most reasonably priced residences hence asking €50,000 more than your property’s worth will not make your life easy.

Factor 6

Next, the rents and yielding rates have a significant impact on the selling supply of the property in Cyprus.

According to the Royal Institute of Chartered Surveyors (RICS), average gross yields for flats in Cyprus were 4.8% in 2020, down from 5% in 2019, but up from 4.5% in 2018, 4.3% in 2017, and 4.4% three years ago. There was a little dip in the gross yields for homes, but they still outperformed those of the previous three years, which were all lower than 2.1 percent.

In comparison to other Cypriot cities, Nicosia and Limassol typically provide greater gross rental returns.

According to consultant Wire FS, in the year leading up to the first quarter of 2021, monthly apartment rents in Cyprus decreased by 0.6 percent. House rentals, on the other hand, rose by 2.6 percent during the same time.

Property sales are expected to slow in 2022.

All districts had increases in the overall number of property sales in 2019, making it the most successful year on record since 2008. By the end of 2021, it is predicted that sales will reach and nearly surpass the 10,000-unit threshold.

This figure is practically identical to the overall sales for the year 2019, which totaled 10,366 units. It should be noted that the year 2019 was the last year in which the Citizenship by Investment plan was actively operated in the country.

In order to compensate for the adversities and constraints imposed by the worldwide pandemic, the number of sales is already pretty large at present.

The number of sales is predicted to decline by 2022 as affordability continues to deteriorate, borrowing rates are set to rise, and supply is expected to expand.

The decision to sell a property is complicated.

It is always a personal and tough decision to decide whether or not to sell one's residence. The presence of the Coronavirus has merely added to the complication.

However, in order to make better selections, it is necessary to continually take into account the current and expected market circumstances. Selling a home may be a time-consuming, stressful, and anxiety-inducing process.

The following five measures will help you when selling a property in order to accomplish it more effectively, regardless of whether you are selling a Villa in Paphos, a cottage in Limassol, or an apartment in Nicosia.

1. Become familiar with the property sale procedure.

People who are selling a house have (in the vast majority of cases) previously purchased the property in issue. As a result, they have already witnessed the conveyancing procedure in Cyprus, despite the fact that it has been some time.

Selling a property, on the other hand, is a very different experience, and it would be wise to get professional guidance on how to proceed.

2. Select the most qualified real estate agent.

Real estate agents are often motivated to sell a home for the greatest possible price since their commission is contingent on doing so.

It is mandatory for estate agents in Cyprus to be licensed, and therefore recommend that you visit at least a number of different estate agents before making a decision.

You have the option of using their exclusive service or their non-exclusive agency service, which will be more expensive on average (some of them may not have a non-exclusive basis of co-operation).

The majority of estate agents will wish to work as exclusive agents. However, depending on your needs, you may decide to promote your home with more than one agency.

3. Make use of independent legal counsel

Real estate agents are often motivated to sell a home for the greatest possible price since their commission is contingent on doing so.

It is mandatory in Cyprus for estate agents to be licensed, and therefore recommend visiting at least a number of different estate agents to compare and contrast their services.

You have the option of using their exclusive service or their non-exclusive agency service, which will be more expensive on average (some of them may not have a non-exclusive basis of co-operation).

The majority of estate agents will wish to work as exclusive agents. However, depending on your needs, you may decide to promote your home with more than one agency.

4. Fees as well as a step-by-step instruction

A set fee should always be agreed upon between you and your lawyer prior to the sale of your property. You will be provided with a quote and will have the option to proceed or not.

Once you have decided to continue, it is best to have a plan in place that outlines what will take place and what will be expected of you at each stage of the process in order to complete your plans.

For example, you could be planning to leave Cyprus in a few days and would like to leave a power of attorney for the lawyer to undertake the conveyancing process on your behalf.

5. Documentation for a property in Cyprus

You will be required to prepare certain documentation in order to complete the sale. As part of the method, companies provide lists of papers that must be completed, and you may check off the ones that have been completed.

These will vary depending on the circumstances but will normally include details regarding the property, the purchase contract, any mortgages that will need to be paid off, and other relevant information.

Finally, the individuals you work with are important since it is dangerous to undertake things on your own without proper supervision.

Expecting a clear picture of the process and excellent customer service from the people you select to engage with will allow you to be in control and stress-free throughout the process.

Christos Nikolaou

Author: Christos Nikolaou

BEng Mechanical Engineering, MSc Real Estate, ETEK Property Valuer, Register and Licensed Real Estate Agent.

Christos Nikolaou is the founder and Managing Director of Property Canvas, he holds a license as an Estate Agent from the Association of Real Estate Agents of Cyprus and he is a registered Property Valuer in the Technical and Scientific Chamber of Cyprus (ETEK). He is the author of our “Is it a good time to sell a property in Cyprus?” and is a certified advance negotiator.

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