The SIXTEENTH edition of the RICS Property Price Index recorded significant falls across Cyprus’ major urban areas, with property prices and rents falling in most districts. Overall, Nicosia and Limassol fared worst as they were the least affected markets until the second half of 2012.
Over the quarter, prices of residential apartments and houses fell by an average of 2.7% and 1.0% respectively.
Although apartments and houses in the Famagusta district showed a marginal increase in their capital values over the quarter, increasing by 2.3% and 3.7% respectively, the prices of houses and apartments in other urban areas fell.
House prices in Limassol fell by 3.0%, followed by Nicosia (-2.5%), Paphos (-1.7%) and Larnaca (-1.3%).
Apartment prices in Larnaca fell by 5.2%, followed by Nicosia (-4.3%), Limassol (-2.5%) and Paphos (-2.4%)
Compared to Q3 2012, prices have dropped by 14.6% for apartments, 11.1% for houses, 20.2% for retail, 13.2% for office, and 16.2% for warehouses.
RICS Cyprus commentary
During the third quarter of 2013 Cyprus bore the consequences of the decisions of the Eurogroup on 15 and 27 March to “bail-in” the depositors of two of Cyprus’ largest banks, to close down Laiki Bank, and to impose capital restrictions. The implications of these decisions were unfolding throughout the quarter, with no bank finance being available and deposits being blocked in bank accounts.
Given prevailing economic conditions and the turbulence in Cyprus’ banking system, there was a lack of transactions during the quarter. Local buyers in particular were the most discerning as the increase in unemployment and the worsening prospects of the local economy led to a sharp reduction in interest. Furthermore, those interested were unable to access bank-finance or their deposits.
Price changes over the past year
Compared to Q3 2012, the average price of a residential apartment has dropped by 14.6%, while the price of an average house has fallen 11.1%.
Prices for commercial property have also fallen, with the price of retail units falling by 20.2%, while the prices of offices and warehouses have fallen by 13.2% and 16.2% respectively.
Gross rental yields
Yields are a useful tool showing the relationship between rent and property prices. At the end of Q3 2013 average gross yields stood at 3.8% for apartments, 1.9% for houses, 5.3% for retail, 4.5% for warehouses, and 4.3% for offices.
(Derived from the RICS Cyprus Property Price Index for Q3 2013)
The parallel reduction in capital values and rents is keeping investment yields relatively stable and at very low levels (compared to yields overseas). This suggests 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
(All property types used to calculate the index are: freehold, have all licences and permits in place, have their Title Deeds, are subject to VAT and are in a good state of repair).
Monitoring Process
The estimation of price levels is carried out by accredited RICS property professionals who are active in the relevant markets.
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.
hanichehaiber, you are of course entitled to your opinion however mine is that the prices quoted in the report are rather optimistic and far too high given the quality of the product, infrastructure and environment, the unaddressed issue of no title and the very high risk of losing ones life savings if investment in property is made. Those of us who have known Cyprus since the 50’s know that property is artificially inflated and that the market cannot be sustained. The bubble is slowly deflating as it has not been permitted to burst.
@ Mr Hanichehaiber.
Those properties where the Title Deeds are not available, are to be considered “trash properties.”
Not to be touched with a bargepole.
I have been told to expect a loss on my Cyprus property when I try and sell it, I have tried for over one year and had no interest before the bailout.
That loss I was advised could be 50% or more, we decided to rent it out instead for now, and returned to the UK. As we are not getting any younger, we yearn to own our own four walls again, so must sell there to buy here in the UK once more, but we can’t deal with such a loss, most of our life savings went into building our property and buying the land in Cyprus, only to see it disappear in value.
Yet here the average price in the district we used to live in claims to be quite reasonable at just under €350,000, the yardstick used for the ‘average’ property is a three bed semi, with garden 250sq m. Given those figures our property, much bigger and with lots of extras plus title deeds, should by rights be worth what we think it’s worth, not half of what we paid for it six years ago!
I wonder sometimes if it’s all just for others to gain ‘bargains’ or if the University of Reading are taking into account absolutely everything that’s wrong with the housing market in Cyprus. I of course hope they are right, and when we do our best to sell will at least get our money back, but I’m not optimistic.
So we are led to believe that a burning necklace has a value. So how much is a ball and chain worth, because I’ve dragged mine around for over 10 years.
Dear Sir,
All the prices you are publishing exist only in your reports
None of your published prices exist in the market unless it is a trash property!
Average house in Famagusta is more than that is Limassol and Larnaca, yeah ok, I believe it, not!
Crdibility of this report is already in question, but that’s just humble opinion.