With many of us heading off for property viewing trips in Cyprus, what can we expect from the property market in Cyprus this spring? The news is mixed. Prices are rising but maybe too fast. The golden visa is working but maybe too well. Rentals are booming but the government wants a piece of the action!
Changes to golden visa
Cyprus’s citizenship by investment scheme, whereby you can gain citizenship by making an investment including in property, is going to be tightened up and made more expensive. It will rise from €2million to €2.5million, as well as a contribution of €75,000 towards providing affordable housing for local people.
Despite some criticism, including from the EU, it certainly won’t be abandoned, having brought €6.6billion into the country in the last five years. The Government credits the scheme with reviving Cyprus’s property market.
This is not to be confused with the residency by investment scheme, which is considerably cheaper at just €300,000. This requires you to buy a new property, and in return you get travel rights across the Schengen area. All you need do is travel to Cyprus once every two years – which is no great sacrifice in our opinion!
Although British people will have a couple of years to get residency as an EU citizen if the EU Withdrawal Agreement is passed, some have been gaining citizenship. In 2017, around 9% of golden visas were issued to British people.
Sales continue to increase in Paphos
The latest data from Cyprus’s Department of Land and Surveys has found that sales in Cyprus remained steady in the past year. In the first quarter of 2019 there were 2,366 sales compare to 2,129 in Q1 2018. Cyprus and Nicosia had the biggest rises.
Of the 766 property contracts in January, around a third were to buyers from outside Cyprus.
Are apartment prices overheating?
Cyprus’s central bank is warning that prices in some parts of Cyprus are rising too fast. They note the fact that property prices are only rising by 1.6% per year across Cyprus as a whole. However, apartment prices have been rising faster, and in Limassol they rose by 8.7% in the past year.
In Q3 of 2018 – July, August and September – the price of apartments in the Paphos and Famagusta areas rose by around 5%. In Larnaca and Nicosia the rises were far more modest. The bank blames the lack of overseas interest in particular for prices in Nicosia only rising 1.2%.
The bank said: “Despite the moderate average price growth, the growth momentum particularly in Limassol highlights the need for close monitoring of the developments and vigilance.”
Control on rentals
If you are planning to fund your holiday home purchase in Cyprus with rentals, do get legal advice first. Lawmakers are currently considering restrictions on short-term, Airbnb-style rentals. And with an estimated 40,000 such properties on the island, you can see why the authorities want more control.
All such properties will have to be registered, have a VAT number and comply with health and safety regulations. There will be a registry of short-term self-catering accommodation, with each property having a clearly identifying number so renters can check their holiday accommodation is fit for them.
Although many of the affected properties are in the countryside, and a vital part of many people’s income, rules governing apartments are still under discussion. The debate is about whether other apartment owners have to be consulted when one owner wishes to offer rentals.