THE SEVENTEENTH publication of the RICS Cyprus Property Price Index reports property price falls in almost all areas of the island and types of property, with significant falls being recorded in Nicosia.
Over the quarter, the average value of residential houses and apartments fell by 1.6% and 0.5% respectively.
Apartment prices in Paphos increased by 0.6%, while those in Limassol and Famagusta remained steady. However, apartment values in Nicosia fell by 6.3%, while those in Larnaca fell 0.8%.
Although house prices in Limassol and Famagusta remained steady, their values fell by 1.4% in Larnaca and by 0.6% in both Nicosia and Paphos.
RICS Cyprus commentary
During the fourth quarter of 2013 the Cyprus economy began stabilising from the impact 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 secondary implications of these decisions, mainly the reduction of bank staff, the increase in unemployment, and further decreases in salaries, were unfolding throughout the quarter.
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.
Property price changes over the past year
Compared to Q4 2012, the average price of a residential apartment has dropped by 13.3%, while the average price for a house has fallen 10.5%.
Commercial property prices have also fallen, with the price of retail units falling by 19.8%, while the prices of offices and warehouses have fallen by 12.8% and 15.4% respectively.
Gross rental yields
At the end of Q4 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 Q4 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).
The estimation of price levels is carried out by accredited RICS property professionals who are active in the relevant markets.
The methodology underpinning the RICS Cyprus Property Price Index was developed by the University of Reading UK and may be viewed by clicking here.