There are fundamental problems negatively affecting the property market in Cyprus at the moment, but there are also elementary reasons why property in Cyprus will avoid the worst of the credit crunch situation and why the Cypriot real estate landscape will remain fairly robust in our opinion.

If you’re looking for a high returning overseas investment asset, a property in Cyprus may not be your best buy at the moment, but if you’re looking for a home overseas in a location that allows you to really manage your finances in retirement and enjoy a great standard of living for less – a Cyprus property might just be the best thing you could invest in!

The fact of the matter is, the health of the property market in Cyprus is heavily reliant on the numbers of overseas buyers who commit to the market each year.  There is a finite amount of local demand, therefore the government is aware that it has to do all it can to promote the appeal of a buy in by a foreign buyer.  To that end they invest in infrastructure to enhance the appeal of the island, and they have fought the EU very hard to retain the taxation advantages the island has in place that encourage people to look more closely at the benefits of buying a home and moving to live in Cyprus.

However, the facts that Cyprus is a 4.5 hour flight away, it is an island with a severe and worsening water shortage problem, it’s expensive to get to and within the tourism resorts it’s expensive to enjoy have all had a slowly but surely increasing negative effect on the numbers of particularly British buyers entering the marketplace in the last 12 months.

Causing a worsening of the situation in the Cypriot property market is the fact that British buyers are now facing stagflation in the UK – the cost of living is increasing sharply as house prices and the economy falter meaning fewer people can sell up and ship out or simply free up equity in their homes to afford to buy a property abroad in a country such as Cyprus.

BUT – against this fairly bleak backdrop are the fundamental factors supporting the property market in Cyprus for the long-term.  Firstly you have the fact that the average price paid for property by a retiring Briton moving to Cyprus is GBP 77,000 according to the Sunday Times, compared to GBP 130,000 in Portugal, GBP 137,000 in Spain and a whopping GBP 140,000 in France.  Next up you have the fact that Cyprus only taxes retirees 5% on their pension income.  So, if you are looking for an overseas location to retire to to ensure your pension income goes so much further – Cyprus is a logical choice!  What’s more, it is possible for some people to move all their assets and income generating wealth offshore and avoid all forms of taxation in Cyprus depending on their personal circumstances and the amount of income they remit to Cyprus annually.  Cyprus has also scrapped inheritance tax – however as Briton moving to live there you will have to give up the UK as your nation of domicile before you can benefit from this particular advantage.

So, as you can see, there are fundamental reasons why Cyprus will remain a popular choice with people seeking a move overseas to enjoy the perfect blend of sunshine and financial savings – which is why we think the property market in Cyprus will avoid the worst of the credit crunch fallout and only decline a little rather than crash completely.