Cyprus home values plunged 5.9% in the second quarter – the biggest drop in the past two years.
The Central Bank of Cyprus slipped 2.2% from the first three months of the year, led by a 4.4% fall in house values and a 3.7% drop in apartment values in Famagusta.
Paphos fared best, with declines of just 0.5% for houses and 0.4% for apartments.
A separate survey by the Royal Institution of Chartered Surveyors (RICS) showed decreasing values and rents across the island in the second quarter.
The RICS survey showed house prices down and 1.2% and apartments 2.% in the second quarter, with Limassol suffering the worst falls – 3.4% for apartments and 2.3% for houses.
Compared with the second quarter of 2011, apartments prices fell 10.2% and 6.4% for houses.
Risky investment warning
The average rental price in the whole island fell 2.1% in apartments and 0.5% in homes.
Comparing with the second quarter of 2011, rental rates fell by 4.7% for apartments and 3.3% for houses.
“During the second quarter of 2012, our economy further burdened by the consequences of political unrest in Greece and uncertainty observed in the local economy,” said a RICS spokesman.
“The worsening situation in Cyprus and the growing political and economic instability across the Eurozone, led to a significant slowdown in lending and further increase the unemployment rate. The first half of 2012 saw investors to postpone decisions and seek safe havens for their funds.
“Under these circumstances, homes are a “risky investment” with a negative short and medium term. This has led to a decline in interest from local and foreign buyers, resulting in a low number of transactions.
However Fred Brown of PropertyInternational.com says “we have seen an increase in enquiries for properties in Cyprus, we feel that these are from investors looking to take advantage of the dip. We will be running a questionnaire in the coming weeks which should give us more of an insight”.
Corruption allegation
“The decrease was particularly evident from locals, as rising unemployment and deteriorating prospects for the local economy has led to a sharp decline in interest. ”
Meanwhile, the housing market on Cyprus looks to be shifting from bad to even worse after allegations of corruption were raised by SCOTTISH European MP Ian Hudghton in the European Parliament.
“A significant number of constituents have complained about the incidence of alleged corruption in the Cyprus property industry,” he told the parliament. “Is the commission aware of such breaches of the law, and what action has it taken in relation to complaints about property transactions in Cyprus?”
EU Commission Vice President Viviane Reding responded by letter.
“As regards the problems faced by a number of property buyers in Cyprus who failed to receive their title deed, the commission has already initiated measures to ensure both an effective protection of consumers and a correct application of EU legislation,” she said.
“The commission sent an administrative letter to the Cypriot authorities enquiring about the actions carried out at national level to address the reported problems, in particular to ensure that buyers are provided with all necessary information to be able to take an informed purchase decision, such as the pre-existence of a mortgage on the property offered for sale.”
She also advised the MEP to send any evidence of corruption to the European Commission.
