LAST week we reported on the demise of the BuySell Cyprus Home Price Index. In an announcement on their website MAP S Platis, the organisation that produced the Index on behalf of BuySell, said “In anticipation of an official Index from the Statistical Service of the Republic of Cyprus, the BuySell Home Price Index shall stopped being produced, as of the First quarter of 2009”.
From MAP S Platis’ statement everyone assumed that the Cyprus Statistical Service (CYSTAT) would take on the responsibility of producing the property index. (CYSTAT functions under the Ministry of Finance and is the authority responsible for compiling and publishing most of the official statistical data in Cyprus).
Local banks to produce a property price index
However, the local banks have got in on the act and will also be preparing a Property Price Index for Cyprus; some pundits are extremely concerned over this development.
In an interview with the Financial Mirror George Mouskides, chairman of the Association for the Promotion of Property Developments, said that:
“A Property Price Index is a positive and useful tool. Provided it is accurate, it is a useful statistical tool for all those involved in the property sector. But it is worse to have an unsound PPI than not to have one at all. This is why the banks should approach this particular issue without agendas and ulterior motives if they really want to have positive results.
Moreover, banks should not proceed alone with this. It is essential that the Land Registry be involved, not simply as a partner, but as a protagonist.”
RICS Cyprus jumps on the bandwagon
In the last week we have learnt that the Royal Institute of Chartered Surveyors (RICS) has plans to produce yet another Property Price Index for Cyprus.
RICS Cyprus has commissioned the University of Reading in the UK to produce a methodology for a ‘RICS Cyprus Property Index’; the first in its series of indexes will be presented in January 2010. According to reports, the index will cover the price of homes and offices, shops, warehouses and industrial estates in all districts of Cyprus.
But yet again, concerns have been expressed over this latest development. As a number of RICS Cyprus members are known to have interests in other real estate related businesses (including estate agencies, property construction, banking and property investment) they may be motivated to manipulate the index in their favour. (This was the major concern over the validity of the now defunct BuySell Home Price Index).
Although the intentions of the banks and RICS Cyprus may be honourable, questions will always be raised on the independence and validity of any Cyprus Property Price Index they may produce.
Surely the only way to avoid potential conflicts of interests is for the Cyprus Property Price Index to be produced by a competent Government authority with no connections to or interests in the property business or construction industry; i.e. the Cyprus Statistical Service (CYSTAT).
With 146 permanent staff based in Nicosia, Limassol, Larnaca and Paphos, CYSTAT is ideally located to collect property sale data from the Land Registries and already has the necessary infrastructure in place to publish its analysis of that data.