We bet property sales will go up in February, April and May
A few days ago, when the Department of Land and Surveys released the data on sales contracts filed in the first month of 2021, I was particularly struck by the fact the numbers and percentages were presented without an analysis, which gave the impression the beginning of 2021 was disastrous.
Almost everyone involved in the field were focused on the 23% decrease compared to the corresponding month of 2020 and the 30% decrease compared to December 2020, disregarding important factors pertaining to this period that made things different. I will briefly mention that there were no restrictions in force last January and that the sense of uncertainty hadn’t yet gotten under people’s skin.
I want to clarify that my intention is not to be the harbinger of glad tidings, since the real estate sector faces great challenges and is evidently not in the best shape. However, I believe a more thorough data analysis is necessary, not only to have a better grasp of the situation, but mainly to avoid giving the public the wrong impression and spread panic. In any case, if we look at the matter practically and sensibly, no market in the world can withstand monthly fluctuations in the region of 20-30%.
We estimate that the corresponding data released by the Department in February will show significant increase compared to the previous month, mainly because the restriction measures were relaxed. Since we were in lockdown during the first three weeks of January, the Department was understaffed and several transfers and deposits were moved to February. We can also safely predict, assuming there is no new wave of cases, April and May will be significantly better than the corresponding months of 2020, simply because there was a wide lockdown in effect back then and there was a market freeze at that point in time. Will anyone remember that, though? Making selective mentions to changes without accounting whether the comparison/calculation is founded on a solid basis simply amounts to mathematical distortion.
Indeed, there is still great uncertainty with regards to foreign property buyers.
Initially because of travel restrictions and then due to the abolition of the Citizenship by Investment scheme. This uncertainty mainly derives from non-EU buyers, since purchases from EU buyers have remained stable in the past few years. Of course, in January, sales contracts filed by EU buyers had a monthly decrease of 47%. However, this can also be explained: British buyers – a large market – are now in the category of non-EU buyers following Brexit. Had this change not happened, we estimate the decrease would have been a lot smaller. At the same time, the 17% decrease in non-EU property buyers would have been even greater.
For 2021, we believe interest from Cypriot property buyers will remain at satisfactory levels and will possibly be reinforced in the second semester if everything goes well with bringing the pandemic under control. During the pandemic bank deposits made by Cypriots recorded an increase, with many now looking to acquire real estate either for investment or for own use. As we have already mentioned, much of the uncertainty relates to foreign buyers, where there has always been a strong dependency. It should be taken into account they were responsible for 37% and 43% of all sales contracts in 2019 and 2020 respectively. What is more, the above percentages would have possibly been different if there were any data in relation to the value of the sales contracts. Once again, though, we should not be fooled by numbers. For example, if in Famagusta there was a 63% decrease in transactions made by non-EU buyers, in practice this means that only 7 sales contracts were filed instead of 19. This is what we call the Percentage Fallacy. The same fall in percentage points would have been far more distressing had the sales contacts dropped from 200 to 74.
So, until the situation with the pandemic is all straightened out, as the now non-EU British say, stay calm and keep selling (or buying)!