Cyprus Latest News Sept14

It's been a while since I've managed to write a news page for which I apologise. I can only blame a truly hectic year where I turned 50 and have started a new journey in life by training to become a certified yoga teacher!

But please read on if you want to find out what's been happening on the island of Cyprus in 2014.

The Cyprus Financial Crisis

It hardly seems like yesterday, but it's been over a year now since Cyprus was left reeling by a financial crisis that almost brought the island to its knees. Thousands of islanders lost huge amounts of money when Laiki bank was forced to close and the Bank Of Cyprus had to absorb the "good" part of the bank.

To an outsider, everything seems normal; shops and restaurants are open, the beaches have been crowded over summer and the sun continues to shine. But the aftermath of the crisis is still visible if you look closely. Many shops now lie empty including vast buildings formerly occupied by the big supermarket chain Orphanides. Half-finished villas and apartments look like a concrete graveyard, never to be filled in. Everyone is feeling the pain from those who lost money over a year ago to those who now feel they are losing more and more each day as taxes rise to help fund the bail-out given to Cyprus by the Troika.

The only thing I have noticed that hasn't changed is that the coffee shops are still full, probably full of people with nowhere else to go, although how they are finding the money to actually pay for the coffee, from an endless string of new coffee shops that seem to open, is a mystery. Cyprus' financial crisis is ongoing and won't be over anytime soon.

Cyprus Taxes continue to Rise

When I moved to Cyprus back in 2005, it was a very cheap place to live. Inevitably prices started to rise, especially after the island adopted the Euro in 2008, but since the financial crisis back in March 2013, taxes have become a new way of life here on the island.

Last year, a new property tax was introduced, forced upon the island in order to fund the €10 million bail-out given by Europe. Compared to the equivalent council tax in the UK, the property tax is relatively small with most people paying around €100 each if living in an average 3-4 bedroom home with a pool. But that will change as from next year, houses have been revalued, so the property tax will rise.

If you have savings either in Cyprus or elsewhere, the defence tax payable on interest is now a shocking 30% - in 2005 it was just 5%, rising to 10% a few years later and then 15%. Doubling the number to 30% now means that most people would be better off moving elsewhere if they are living, in part, off their savings as many retired people do. Sadly, this has a knock-on effect on all local businesses as, with less money to spend, people cannot afford to eat out as much as they did or buy as many items as they used to.

Time to Buy a Property in Cyprus?

The property market in Cyprus has been in the doldrums for several years, but was particularly affected by last year's financial crisis. As many people, both foreign buyers and locals who had invested in property, struggled to pay their mortgages, ownership reverted to the banks, already with high levels of debt on their books.

In order to qualify for the next "tranche" of bail-out money, the Cyprus government has been forced to introduce a raft of money-raising measures, not least the taxes discussed above. One of the other key measures has been the much-discussed Foreclosures bill, passed this week, where banks will be forced to sell-off property at a low price (but not less than 50% of the original purhcase price) in order to recover some of the debt. This will be done on any property that is not a principal place of residence and the market will become flooded with yet more properties at knock-down prices.

So is it a good time to buy? Not yet in my opinion, as though there are already some very cheap properties on the market, prices will continue to decrease and will probably do so for many months/years to come as the effects of the Foreclosures bill are fully felt.

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If it sounds like it's all doom and gloom on the island, well I guess it is from a monetary angle. But out of chaos and pain will come a better life eventually as we become less attached to material goods and just appreciate the good things in life - a warm climate, fresh produce that is still great value, and a willingness to share what we have - this is still the case on our little side of the island.

That's all from my Cyprus Latest News Sept14.

See you next time.