Property prices are still falling in Cyprus

Property prices are still dropping in Cyprus, and the asking price of homes has fallen by 25% in the last 18 months. Even these huge discounts are not sufficient to attract buyers, as the only property is being sold are those regarded as being real bargains.

The price drops are being blamed on a combination of factors including the global recession, the problem with title deeds and stricter lending conditions. Apparently banks have cut the number of mortgages by as much as 50% as they are too scared to lend. Of course some properties were simply priced too high for the market and a correction was inevitable.

It's not all gloom and doom, as some experts remain optimistic about the future of the property market, and feel that certain places have just fallen out of fashion, while those nearer the sea or with good views are holding their value. Properties in Paphos had been particularly badly hit, but there are signs that the market may be picking up here, as large numbers of Russians are choosing to buy property here as Paphos is seen as a quiet, beautiful and safe location.

British buyers are still in short supply, although some Cypriots are taking advantage of the low prices to invest in property. The story isn't much better for the rental market as a villa which would have previously been rented for €600 a month will now rent for €500, but there are hopes that improved tourism figures may help boost the property market. Revenue for tourism was up 53.5% in April.

Stylish living in Sweden

Although it's just a two-hour flight away from the UK, very few Brits buy property in Sweden, and yet the country has much to offer as it has stunning scenery and great skiing. While the north of the country is sparsely populated, the southernmost part of Sweden is on the same latitude as Edinburgh and the cities of Gothenburg and Stockholm have lots of cultural entertainment and restaurants but yet remain relatively uncrowded.

Temperatures here can reach 30°C in the summer and the area attracts large numbers of Dutch, Germans and Norwegians who buy summer houses as holiday homes.

Prices in Sweden fell by around 10% to 15% in the aftermath of the global financial crisis, but as the government lowered the interest rates, prices have gradually climbed back to where they were at their peak.

Property prices are much lower outside the cities and towns and a lot of Swedes own a second home, or summer house which is little more than a log cabin.

These can cost as little as £25,000. Prices in Stockholm can vary as it is made up of separate villages which each have their own character. In the city centre most people live in apartments, and not surprisingly this is the most expensive area at around £6250 per square metre.

A family house close to the city centre will cost about £773,000, but you can halve this figure by moving slightly outside of the city. Swedes enjoy a very high standard of living, and there are good job opportunities here for people with good qualifications, but taxes are high.

Spanish Property Benefits from Construction Decrease

Spain's property market is benefitting from a decrease in new home construction in 2010. A decrease of 33 percent has been reported from 2009 to 2010, according to the latest statistics from the Government.

A 60 percent decrease in Spain property construction completions have occurred from 641,419 new homes in 2007 to 257,443 new homes in 2010. This is largely due to a decrease in demand for residential properties.

Planning approvals have also declined according to research, as they hit an all-time low of 91,662 last year. This is an indication that less and less homes will be coming onto the market for the short to medium future.

Spain has been experiencing a great oversupply of homes across many regions of the country, so a slowing down in property construction was necessary to balance things out. Since Spain’s property market peaked in late 2006, property prices have decreased by up to 60 percent.

There are around one million unsold homes on the market in Spain currently. Despite the large number of homes, some house builders, such as Polaris World, are still planning on building new homes this year. Property experts do not believe that this is a good idea, as the market is best when supply vs. demand is more balanced.

With the large number of unsold properties at affordable prices, the amount of overseas investors has increased. Investors are very interested in capitalizing on the oversupply to fatten their investment portfolios in the hopes of high returns on their investments in the years to come.

Denmark's property prices stable

House prices in Denmark recovered strongly during the first half of 2010, but came to a standstill during the second half due to weaker economic growth. Prices rose by an average of 2.6% every quarter between the fourth quarter of 2009 and the second quarter of 2010. While prices of flats fell slightly in the third quarter of 2010 they were still 6.6% higher than the same time in 2009.

The present property cycle began in 1993 with prices peaking between 2006 and 2007 by which time the price of a single family home had increased by almost 250%, while flats had increased by 360%. Since then prices have declined by just under 30%. The cost of buying a property in Denmark is relatively low at 1.3 to 3% of the property value, and rental yields here are between 4.2% and 5.7% and taxes on rental income are moderate.

Denmark enjoys one of the highest standards of living in the world and is one of the few countries that contribute more than 0.7% of its gross national income to foreign aid in less developed countries. Principal exports are food products and machinery with the United States being its largest non-European trading partner.

The economic crisis has affected Denmark as its export market has shrunk which is partly due to weaker trading partner’s currencies. There are also some problems within the banking system but overall it remains stable and is considered to have sufficient capital to meet the needs of the economy and interest rates are expected to remain steady as inflation is under control. The economy grew by 1.9% in 2010 and is expected to grow by 2% this year. The country has one of the lowest unemployment rates in the EU.

Turkey to be Overseas Property Hotspot in 2011

Write About Property’s Liam Bailey has predicted that Turkey property will be the hottest overseas property investment in 2011. Bailey pointed out his surprise that he would do so, having been a staunch member of the “Turkey-needs-EU-membership” brigade until this year.

Bailey cited the excellent fiscal management by the AK party, which has focussed on paying down public debt even while its neighbours and competitors (Greece, Portugal, Spain) were running up huge tabs. On top of that, the banking reforms made after the Turkish financial crisis in 2001 left them able to withstand the crisis.

This left Turkey in a strong position when the crisis struck, because liquidity was high, and it was also able to lower interest rates as a measure of budgetary management rather than purely a alarmist way of fighting of the crisis. This calm, measured response increased the confidence of investors,

But, said Bailey, "what really sums up present day Turkey vis-a-vis worthiness as a property investment destination, with or without EU accession, is the great irony of Turkey ending its reliance on IMF assistance less than 1 year before Greece and Ireland would need such assistance.

"The balance of stability, high growth, high liquidity, low property prices and low interest rates is sure to make Turkey property a favourite with investors in 2011," he said.

Bailey said in other statements that Istanbul property was one of the top choices with pure investors, which are becoming more common in the Turkish property market, on top of the already strong holiday property market.

Europe Needs Turkey as Much as Turkey Needs Europe Says Wulff

Europe "needs Turkey as much as Turkey needs Europe."

Not a statement you'd expect from the President of Germany, given the country's staunch and long standing objection to Turkey's accession into the European Union, but that is exactly what he said.

"We can complement each other in many ways and collaborate for the solution of problems in the Middle East Caucasus and the Balkans," said Wulff, Speaking at a dinner hosted by Turkish President Abdullah Gul in his honour at the Dolmabahce Palace in Istanbul.

He also said:

"Turkey is an important partner for Germany, one with self confidence. However there is yet much we can and must do to enhance the mutual understanding. Building the bridges and promoting the dialogue we aspire, through projects within the scope of the Ernst Reuter Initiative, is my personal desire and our common goal."

"Turkey, with its growing weight in the world, is a very important partner for us in climate change policies, in counter-terrorism, and finance market regulation. Therefore, I shall work within my full capacity to enhance German-Turkish partnership and brotherhood," said Wulff.

The statements came just a few days after a partial visa-free deal between Turkey and Portugal was announced. The deal will cover only citizens that hold a special passport, and will only allow travel for up to 90 days every six months. It still has to be ratified by parliaments on both sides.

These can only be called significant steps in Turkey's process of joining the EU. We have written many times on this blog that EU accession has become less necessary for Turkey in recent times, but we also agree with an article in The economist saying that while EU entry may be a long, long way off, aspiring and reforming towards it are good for Turkey and should continue.

EU Accession No Longer Vital to Turkey’s Interests

This week David Cameron called Turkey the BRIC of Europe, but still we expect no progress on the EU issue. This week French foreign minister Bernard Koucher pledged France’s support for Turkey, but still we should expect no progress on the EU issue. The EU will publish a review of Turkey’s progess towards joining the EU, we expect it to show little progress on the EU issue. Until France, Germany and others remove their block, which won’t happen until Turkey opens its ports to Greece, which won’t happen until and so on and so forth – suffice to say we are firmly in the land of deadlock.

But the fact is the Turkish economy grew by more than 10% in the first half of this year, and is predicted to grow 7.5% for the year as a whole, that is growth that Europe’s developed economies like France and Germany can only dream of.

According to a report by HSBC this week emerging markets will be on top of the world table of purchasing power parity within three years; three years during which they will drive the global economic recovery. Turkey was mentioned in the report as one of the biggest drivers of growth. Investment in Turkey is increasing at a rapid rate, including property investment.

EU accession is no longer vital to Turkey’s interests.

This is a common sentiment, in a Hurriyet Daily News article this week titled Forget the EU, RICHARD REID wrote:

In any case, Europe’s closed door may be irrelevant to Turkey’s general prospects. At the moment the country’s global image is one of rude health. Admiring eyebrows are being raised in the capitals that count. Turkey is no longer a minor player. Its momentum should before long carry it to a point where Europeans will be the suitors. And then Turkey can ask them to wait.

EU membership is “no longer such a big deal” for Turkey says Tolga OZCAN, director of Antalya real estate agent New Home in Turkey.

“The Turkish economy enjoyed double-digit growth in both the first and second quarters, with 11.7% growth in the first quarter and 10.3% in the second quarter, compared to growth of 0.7% and 2% respectively for the EU27,” he said. “During this time the biggest growth was recorded in Slovakia with 4.6% in Q1 and 5% in Q2.”

He continued: “On top of that the European banking infrastructure is in disarray, with severe doubts over exactly what levels of bad loans still exist in Spanish, German, Irish and other banks. Compare this to Turkey’s banking system, which, heavily reformed in 2001 is in incredibly good shape.”

The Fading Importance of EU Membership Boosts Turkish Property

The international financial crisis was a mortgage and housing market crash so spectacular that it crippled economies in most countries around the world. The boom that preceded was equally spectacular; so spectacular that it made people forget the cyclical nature of economies and house prices.

The boom was fuelled by a massive increase in overseas property investment, so-called fly to let, which in turn was fuelled by the advent and growth of budget airlines. New cheap flights opened up new destinations and made them accessible to the masses.

Turkey was popular with holiday home buyers and holiday home investors, but for the pure investors fuelling the real boom something was missing. That was EU membership.

Turkey has been an official EU applicant since 2005, but France and Germany have been staunchly opposed to Turkey's entry.

Now though, Turkey is booming while the EU is withering, and this is making investors readdress their position.

In the year to end the second quarter of this year Turkish GDP grew 10.3%. The EU grew 1%.

Turkish GDP grew 11.7% in the year to end the first quarter. EU GDP grew 0.4%

Turkey's budget deficit is under 5% and many EU countries are in real trouble bringing deficits of up to and over 10% under control.

This has made Turkish property a more attractive investment than that of Greece, Italy, Portugal or Spain, take Dubai out of the equation as well and you can see why Turkish property is currently getting so much press coverage.

Italian FM States Support for Turkish EU Accession

Italian Foreign Minister Franco Frattini has given his backing to full EU accession for Turkey, and criticised EU offers of partial membership deals.

Frattini told daily newspaper Il Giornale's politics and economy magazine Dossier Lazio that it was not right for Turkey to be offered a "privileged partnership" by some member countries instead of full membership.

Frattini went on to talk about the massive benefit that Turkey's EU accession could have on relations between the west and the Islamic world, which have fallen to tragic lows of late.

He said that as well as being seen as Islam, democracy and human rights in harmony, but that it would also be a testament to the EU's capacity to embrace different cultures.

"This is a significant historic target which we cannot give up," he said.

Staunchly supportive, Frattini was also quick to tow the party line, he said that Turkey had a long path to accession, and that currently that path did not look easy or promising. He said that Turkey's foreign policy preferences are causing doubts in some EU capitals, and urged Turkey not to give up on reforms.

Turkey should feel it has reached the finish line when it has fulfilled its present obligations, the Italian minister said, warning that it would be a grave mistake to alter the finish line.

Turkey became an official EU candidate in 2005, since then negotiations have moved at a snail's pace. Some now believe that Turkish membership is becoming as necessary for the EU as it is for Turkey, with the latter's greater growth and moves like the Nabucco pipeline.

On the flip side and for much the same reasons,EU membership has and is becoming less and less neccesary for Turkey, it would still boost the Turkey property market though.