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Property prices continuing to fall says RICS

RICS Cyprus reports that prices of apartments and houses nationwide continued to fall during the fourth quarter of 2011 in the ninth issue of its Property Price Index with the hardest hit areas being Limassol and Paralimni.

THE NINTH edition of the RICS Cyprus Property Price Index reports that property prices in the Island’s main urban areas continued to fall during the fourth quarter of 2011 although there was a small increase in apartment rental values.

Commenting on the latest Index Pavlos Loizou MRICS, Board member of RICS Cyprus, said “During the fourth quarter of 2011 Cyprus’ economy bore the consequences of the decoupling of the Greek economy, the slowdown in mortgage and corporate lending, the increased cost of electricity, and the rising rate of unemployment. The combination of the above, along with the decrease in salaries of government workers and uncertainty surrounding Cyprus’ banking system, led to a decrease in retail spending and a slowdown of the economy”.

“Whilst the first and second quarters saw some signs of muted economic growth, the third and forth quarters saw investors postpone their decision making and banks retrenching by limiting the amount of credit available. This led to a low transaction turnover and to reduced interest, especially by local buyers, as they were more affected by the increase in unemployment and the decrease in credit.”

Prices

Prices of apartments and houses showed a quarterly fall of 1.3% and 1.6% respectively. Limassol experienced the biggest drop in apartment prices, down 3.5%. The largest drop in house prices was reported in Famagusta-Paralimni, where they went down by 5.6%.

Nationwide, the prices of retail properties fell by an average of 2.8%, while those of offices and warehouses fell by 2.6% and 3.2% respectively.

Compared with the fourth quarter of 2010, prices dropped 9.7% for apartments, 5.2% for houses, 10.1% for retail, 6.4% for office and 7.8% for warehouses.

Rental values

During the fourth quarter of 2011, rental values across Cyprus increased 1.4% for apartments, driven mainly by increases in rents in Famagusta-Paralimni and Paphos. However, rents fell 0.1% for houses, 3.4% for retail units, 2.01% for warehouses, and 6.9% for offices.

Compared to the fourth quarter of 2010, rents dropped 4.6% for apartments, 0.8% for houses, 11.5% for retail, 11.4% for offices and 9.2% for warehouses.

Investment yields

Yields are a useful tool showing the relationship between rent and property prices. At the end of the fourth quarter of 2011, average gross yields stood at 3.8% for apartments, 2.0% for houses, 5.9% for retail, 4.8% for warehouses, and 4.6% for offices.

Derived from the RICS Cyprus Property Price Index for Q4 2011

The parallel reduction in capital values and rents is keeping investment yields relatively stable and at very low levels (compared to yields overseas), suggesting that there is still room for re-pricing of capital values to take place.

Outline of properties used to calculate the index

Apartments: Residential, two bedroom, 85sqm, Medium quality.
Houses: Residential, three bedroom with garden, Semi-detached, 250sqm, Medium quality.
Retail: High-street retail, 100sqm ground floor area with 50sqm mezzanine.
Warehouse: Light industrial area, 2,000sqm, which includes 200sqm office space.
Office: Grade A, City centre location, 200sqm

Methodology

The methodology underpinning the RICS Cyprus Property Price Index was developed by the University of Reading UK and may be viewed by clicking here.

Readers' comments

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  • andyp says:

    Cheers Mike.

    Just planning ahead in case my turn ever comes.

  • Costas Apacket says:

    Doesn’t the official way to contest such a decision involve paying the over-inflated sum and then appealing within the long winded (and arguably biased) Cypriot legal system?

    I would rather walk away and re-arrange another meeting with my legal representative present.

    As per the other Peter in the linked article,

    http://www.news.cyprus-property-buyers.com/2012/01/28/citizens-charter/id=0010476

    I have now purchased a digital voice recorder and tie-clip microphone and fully intend to use them as and when I’m granted the royal invite to collect my title deeds.

  • Mike says:

    andyp – I complained to the Ombudswoman a year or two ago and to be fair got a very long letter back in English together with some 20 to 30 pages of Greek typeface. Fortunately I could comprehend both and can say that the rhetoric was immense and handed out in ladle fulls but the solution was nowhere to be seen or heard of. Effectively a total waste of time, space and Oxygen. My complaint was in regard to Land Registry failings in contravention of their citizens charter but not values.

    To be fair once the head honcho who I was dealing with (or trying to) for five years moved on to become deputy director – allegedly, thank god; the new man on the fifth floor last year however got the problem sorted in double quick time and with no nonsense. I heard him on another phone speaking in Greek and tearing people off a strip when he had no idea I could understand every word when I was calling from UK. I would certainly advise Peter to challenge what he experienced, that is clearly not right and smells of a minion with delusions of adequacy and a sense of self importance.

  • @andyp – the results of the poll were a 50 – 50 split see the polls archive at http://www.news.cyprus-property-buyers.com/pollsarchive

    No-one has contacted me about the problem recently.

    Firstly, Peter should have stood his ground and asked to see the director. The way to co about contesting the amount charged is described in page 78 of the Department of Lands & Surveys Citizens Charter available from http://www.news.cyprus-property-buyers.com/2012/01/28/citizens-charter/id=0010476

  • andyp says:

    Nigel. Two questions.

    From your poll on LR charges last year I think the result was about 50/50 on inflated values. Do you know if this latest Government scam is now on the rise?

    To whom would the likes of Peter and others affected complain? I assume it be the Ombudsman under consumer protection Laws.

  • @Peter – it is essential that you challenge this – it is totally wrong!

  • Costas Apacket says:

    Peter – I have some questions for you:

    Which District Office did you go to?

    Did you get the official’s name you dealt with?

    Did you have any witnesses or your solicitor present?

    Did you record the conversation at all?

    Who else was present?

    What did you decide to do in the end?

  • James JH Lockhart says:

    Gavin,

    Please do not worry Kim Ill Tof will produce a 5 year plan to double all house prices

    trust in the red book !!

  • Gavin Jones says:

    Peter.

    All these wheezes are to be expected from a communist regime.

    Stalin’s 5 Year Plans for industrialization and collectivization spewed out lies about higher production and yields, with gullible apologists in the West and in the Soviet Union itself believing this nonsense about this brutal ‘Utopia’.

    The same thing’s happening in Cyprus on a smaller scale with the Great Leader saying that everything’s hunky-dory and in effect that, in your case, you’ll have to pay up or else; a crude form of institutionalized blackmail and debasement of the law and/or spirit of the law.

    I’ve just completed reading Robert Conquest’s ‘The Great Terror’. In his introduction he writes the following when describing modern Russia,: “Above all we are still far from the rule of law – much more important than ‘democracy'”. Somewhat sobering as well as profound. Cyprus to a T? I leave that to the individual to decide.

  • Peter says:

    Yet when I went to get my title deeds 8 weeks ago I was told that prices in the Land Registry are no longer based on the contract price, nor on today’s value but on the 2007 price.

    Why? Because 2007 was the height of houses prices on the Island.

    When asked to justify this date there was silence and then take it or leave it.

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