A delay in publishing legislation passed by the Cypriot legislature to abolish property transfer fees or reduce them by 50% for six months “is paralysing the island’s already-damaged housing market”, the publication says, citing as its source the Cyprus Land and Building Developers Association.
Cypriot MPs voted on 3 Nov to do away with property transfer fees altogether on sales where VAT was payable, and to halve them on sales where no VAT was payable, for six months, in an effort to jump-start the moribund housing market. But the scheme was subsequently revised in response to a request from Cyprus president Dimitris Christofias on 17 Nov, with the result that “the revised legislation has yet to be published in the government’s official newspaper, the Cypriot Government Gazette, which means that it has yet to come into force”, the CPN notes.
Thus “even those few buyers who are ready to sign contracts to buy property are delaying matters in the hope that they will benefit from the proposed abolition/reduction in property transfer fees – and as a result. very few property transactions are taking place," the CPN explains.
"The housing market has become paralysed.”
Sales lower than in ’09
Nigel Howarth, an independent property adviser who publishes and edits the Cyprus Property News (CPN), told International Adviser that although the data for property sales in November will not be available until next month, making it difficult to say just how "paralysed" the market is, "sales are now even lower than [they were] the year the market collapsed, in 2009".
"Observers believe that the proposed legislation will help the property market, but properties here are still overpriced," he added.
"We also have the problem of record levels of unemployment, high interest rates and the banks have little money to lend. What they have is for the hit they’ll be taking on their Greek bond holdings. The island’s exposure to the Greek debt has been estimated at 165% of GDP [Moody’s], and this has resulted in downgrates of government bonds, and the top three banks have been downgraded by Standard & Poor’s, Moody’s & Fitch."
On Saturday, Cyprus Central Bank governor Athanasios Orphanides warned that the country "was at the edge of the precipice", and in danger of necessitating cutbacks and tax rises that could impact Cyprus’s role as an international finance centre.
To read the article on the CPN website, click here.
