Buyer psy­chol­ogy on a roller coaster ride

Financial Mirror (Cyprus) - - FRONT PAGE -

Dif­fer­ent camps of thought put for­ward pos­i­tive or neg­a­tive fac­tors re­gard­ing the econ­omy and the real estate sec­tor in Cyprus, only to serve their pur­poses and de­signs.

Buyer psy­chol­ogy is af­fected and buy­ers are trapped in doubt by the ever-chang­ing com­po­si­tion and dy­namism of these fac­tors in the me­dia.

Flip­ping through the pages of news­pa­pers you catch your­self read­ing the same story but un­der­stand­ing dif­fer­ent things. It is as if one news­pa­per paints the story in blue and the other in red, the re­sult be­ing that buyer psy­chol­ogy is painted solid black.

Based on po­lit­i­cal party plans, es­pe­cially just be­fore elec­tions, all is up for gam­bling in the casino of votes. The good of the econ­omy is not to any­body’s in­ter­est. Pop­ulism and party pa­tri­o­tism reign supreme. No­tions like un­em­ploy­ment and stan­dard of life con­cern no­body.

All these re­al­i­ties dis­cour­age po­ten­tial buy­ers who keep chang­ing their mind, ex­pect­ing a sta­bil­i­sa­tion of the sta­tus quo. It seems that con­nected ves­sels.

Here is a list of fac­tors which play a pos­i­tive role in the think­ing of Cypriot buy­ers:

- Fol­low­ing a sharp de­cline since mid-2008, real estate prices seem to be have sta­bilised over re­cent months, as in­di­cated by Cen­tral Bank and RICS in­di­ca­tors;

- The monthly vol­ume of sales is at a low level but a steady rise is be­ing recorded;

- The econ­omy has been record­ing growth for al­most a year as a re­sult of the EU eco­nomic mea­sures;

- Fur­ther re­forms ex­pected in the pub­lic sec­tor, Li­mas­sol port, CYTA, etc. should fur­ther boost the econ­omy;

- Banks have low­ered their loan rates and claim they are of­fer­ing more loans to their cus­tomers. Lower rates are an ex­tra breath of life to many cus­tomers with ex­ist­ing loans; and,

- Buy­ers are now spoilt for choice as there are nu­mer­ous prop­er­ties on the mar­ket.

Over-em­pha­sis­ing the fac­tors be­low af­fects buyer psy­chol­ogy neg­a­tively lead­ing them to avoid any prop­erty trans­ac­tions:

- Strikes in the gov­ern­ment or semi-gov­ern­ment sec­tor, which are po­lit­i­cally mo­ti­vated more of­ten than not, is a neg­a­tive pa­ram­e­ter;

pol­i­tics and

the econ­omy

are in­deed

- Labour unions and other or­gan­ised groups op­pose any re­forms that would help the econ­omy;

- Many in­ter­ested buy­ers ex­pect mass fore­clo­sures and a con­se­quent drop in prop­erty prices, some­thing we don’t be­lieve will ma­te­ri­alise;

- Me­dia over­ex­po­sure of the pos­si­bil­ity, or lack of, Cyprus prob­lem de­vel­op­ments, Tur­key’s stance on the is­sue and the Syr­ian refugee cri­sis, all de­ter po­ten­tial buy­ers, won­der­ing if it is worth own­ing prop­erty on the is­land;

- The huge num­ber of non-per­form­ing loans (NPLs) ren­ders ques­tion­able the sta­bil­ity of the bank­ing sys­tem and its abil­ity to finance growth; and,

- While tak­ing greedy politi­cians to court for fi­nan­cial scan­dals seems pos­i­tive, it also serves as a re­minder to po­ten­tial buy­ers of the in­sta­bil­ity and cor­rup­tion of the whole sys­tem.

Both the pos­i­tive and neg­a­tive fac­tors play­ing in the me­dia on a daily ba­sis put a hold on po­ten­tial Cypriot buy­ers, who have both the will and the cash to back it up.

They shop around but never go the dis­tance. Who can blame them?

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