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Home prices in Cyprus fall

THE latest BuySell Home Price Index indicates that the average price of a property in Cyprus fell during the first quarter of 2009. However, the BuySell figures conflict

THE latest BuySell Home Price Index indicates that the average price of a Cyprus property fell during the first quarter of 2009. However, the BuySell figures conflict with those reported earlier from other sources saying that prices of tourist properties have already fallen by more that 10 times the figure reported by BuySell.

Home prices in the first quarter down by 1.7%. Average home price at €187,053.

GLOBAL real estate trends have eventually reached Cyprus, with home prices displaying a decline, during the first quarter of the year. For the period January to March 2009, the BuySell Home Price Index recorded a cumulative decrease of 1.7%, compared to December 2008, bringing the year-on-year change to -2.2%, for the first time since August 2005.

Overall, Cyprus home prices have been quite volatile during the period, indicative of the uncertainty in the sector and the general economic environment. Home prices recorded a fall of 1.5% during the first month of the year, increased in February by 2% and declined by 2.2% in March. The BuySell Home Price Index closed at 140.52 units (March 2009) bringing the Average Home Price in Cyprus down to EUR 187,053.

BuySell Home Price Index - 1st Quarter 2009

The BuySell Home Price Index was created and is updated monthly on behalf of BuySell Cyprus Real Estate by MAP S.Platis. The Index is announced quarterly and depicts the movement of prices at which residential properties are sold in Cyprus, based on the extensive, Cyprus-wide, BuySell Cyprus Real Estate database.

For more information on the methodology of the Index and on Hedonic Prices please refer to: The “Asking Price and Transaction-based Indices for the Cyprus Housing Market (Rebased)” by Dr. Stelios Platis and Marios Nerouppos of MAP S. Platis (available at the Research Centre).

The BuySell Home Price Index constitutes the only valid gauge of the Cyprus housing market and is considered as an effective tool for home buyers, sellers and investors.

Press Comments

Speaking to a reporter from the Cyprus Mail, Stelios Platis of MAP S.Platis, which is responsible for the Index said he expected prices to drop further across Cyprus.

I think they’ll come further down. Nicosia doesn’t have a vaccine against the crisis. I don’t think the reasons are place specific. It’s a general phenomenon,” he said.

For prices to fall we must have unsold property and no increase in demand. If we follow that theory that it’s mostly foreigners who increase demand, then obviously the crisis is going to affect all cities apart from Nicosia.

But this is half the story because Cypriots are not in the market for housing units now, so Nicosia will also be affected,” he added.

Despite that, Nicosia actually experienced a small increase in the last quarter. “But I wouldn’t draw too many conclusions from that, as it fell significantly in December,” said Platis.

Paphos kept the same levels, which had already experienced a fall, while Limassol and Larnaca dropped average prices.

Yes we are seeing a freeze in supply, but a lot of projects which have already started will be finished soon and they will have to sell them, so I expect lower offers than last year. And no city is immune to this because the crisis doesn’t have geographic location.

Platis noted that banks were not lending at favourable rates, people were not buying because they expected prices to come down, and by the summer, prices are likely to go down more.

We are now at average prices levels of October/November 2007. All the gains of 2008 gone. It took one quarter to throw them in the air. How far lower they go depends how long the crisis will last,” said the economist.

Personally, I remain optimistic. We need to survive a possible summer shock. If the tourism levels are not so bad, Cyprus may survive the crisis with minimum adverse effects.

There will be less quantity of housing units and lower prices but not a crash. My concern is what happens after the crisis? Our competitors, like Spain and others, will have much cheaper products than us,” he added.

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