THE THIRTY-FIRST publication of the RICS Cyprus Property Price Index reports that the average price of residential apartments and houses across the island rose by 1.5% and 1.6% respectively during the first quarter of 2017.
The largest increase was in Limassol where the prices of both apartments and houses rose by 3.8%.
Holiday homes also increased in value over the quarter with holiday apartments rising by 2.6% and holiday houses by 1.9%.
Limassol saw the highest rise in holiday apartment prices at 4.2%, while Paphos saw the highest rise in holiday houses at 3.0%.
During the second quarter of 2017 the Cyprus economy showed further signs of stability, with a seasonally adjusted quarterly GDP growth of 0.9% and an annual seasonally adjusted GDP growth of 3.5%. Unemployment remained at relatively high levels, on a continued downwards trend to around 10.8% (from the high levels of 17%).
Given prevailing economic conditions and the marginally improved confidence in the Cyprus banking system, there are relatively higher transactions during the quarter and improved market sentiment. Financial institutions, despite of their NPLs, have been more willing to provide access to finance and there is an increasing interest from locals.
Cyprus property prices
On an annual basis the Cyprus Property Price Index recorded increases in all in all cities and asset classes, with significant increases being recorded in Limassol, Nicosia and Larnaca, whilst Paphos and Paralimni have shown smaller annual increases.
Apartment prices rose by 6.2%, houses prices by 4.7%, office prices by 1.6%, warehouse prices by 0.2% and retail prices by 2.0%
Across Cyprus, on a quarterly basis rental values increased by 3.0% for apartments, 1.0% for houses, 2.0% for retail, 3.7% for offices and 0.7% for warehouses.
Compared to Q2 2016, rents increased by 8.3% for flats, 10.2% for houses, 6.8% for retail premises, 14.4% for offices and 4.2% for warehouses.
At the end of the second quarter of 2017, average gross yields stood at 4.1% for apartments, 2.1% for houses, 5.4% for retail, 4.3% for warehouses, and 4.9% for offices.
The parallel reduction and/or stabilisation in capital values and rents is keeping investment yields relatively stable and at low levels (compared to yields overseas). This suggests that there is still room for some re- pricing of capital values to take place, especially for properties in secondary locations.