Cyprus property sales plummeted in December, falling 48 percent, ending a 19 month positive run, according to data from the Department of Lands and Surveys.
But data for the year as a whole shows that Cyprus property sales exceeded the 9,000 mark, in a solid performance that is raising concerns among some of a bubble emerging in the real estate market.
In December, figures show that 800 sales contracts were signed regarding the sale of residential and commercial real estate, down from 1,537 in the same month a year earlier.
The sharp drop is largely due to an unusually large spike in property contracts having been signed in December 2017, when deals were rushed through to beat the introduction of a 19 percent VAT tax on land sales in January 2018.
Out of the 800 deals made, 450 related to properties purchased by Cypriots with the remainder being snapped up by foreigners. Drops in sales in December were seen acrooss the market. In Nicosia, sales retreated by 57 percent, while in Paphos and Limassol the drops hit 43 percent and 45 percent respectively.
For the year, total sales contracts reached 9,242, the highest level since 2008.
A key driver behind the good annual performance has been the Cyprus citizen for investment program, which could be overheating the market, according to economist Christopher Pissarides. He warned that any possible changes to the Golden Visa program would create serious problems for the sector.
“It looks like we may be creating another bubble in the property sector. The property market in Cyprus is growing at a rate that’s out of sync with the fundamentals of the economy at large, such as GDP, demand and demographics,” Pissarides, the 2010 Noble Laureate told the Sunday Mail.
"Let’s say a meeting is convened at the European Commission, and as you know a new EC president is coming in this year. What if the new EC president says they can’t tolerate this passport scheme in Cyprus anymore, that it needs to be curtailed? The bubble will burst instantly,” adds the economist.
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