THE LATEST Cyprus Property Price Index published by the Royal Institute of Chartered Surveyors (RICS) reveals that the average price of houses and apartments fell by 1.1% and 0.7% respectively during the fourth quarter of 2014.
The largest quarterly falls were reported in Nicosia (1.1% for apartments) and Famagusta (3.6% for houses).
Values of retail premises fell by an average of 1.6%, values of offices fell 1.2% and values of warehouses fell 1.9% over the quarter.
Compared to the fourth quarter of 2013, the average price of a residential apartment has fallen 5% and the average price of a 3-bed semi has fallen 5.4%. Retail property has fallen in value by 8.1%, offices by 6.1% and warehouses by 5.3%.
Commenting on the latest Property Price Index, Charalambos Petrides from RICS Cyprus said: “It seems that transactions have rebounded and the price fall restores activity with increased property sales.
“Real estate prices are expected to continue declining in 2015 in view of developments in the financial sector, particularly as regards non-performing loans, strict lending policy and high interest rates.
The market is affected by increased property taxes and the issue of foreclosures on mortgaged properties, preventing the market from stabilising.”
Overall property price falls
Since the first RICS Cyprus Property Price Index was published for the first quarter of 2010 residential house values have fallen by an average of 30%, while those of apartments have fallen 40%.
(Note that the RICS Price Index does not include prices of holiday homes.)
Rental values recorded a quarterly drop of 1.3% for apartments, 0.2% for houses, 0.4% for retail units and 0.9% for warehouses. On a brighter note, the rental value of office increased by 0.2%.
Compared to the fourth quarter of 2013, rents have dropped 5.0% for apartments, 3.1% for houses, 8.9% for retail premises, 2.9% for offices and 8.8% for warehouses.
At the end of fourth quarter of 2014 average gross yields stood at 3.8% for apartments, 2.0% for houses, 5.3% for retail, 4.3% for warehouses, and 4.4% for offices.
The parallel reduction 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.
Professional bodies contributing to the Property Price Index are RICS Cyprus, the Cyprus Association of Quantity Surveyors and Construction Economists (??????), and the Cyprus Association of Valuers and Property Consultants.
Characteristics of the properties used to compile the index and the methodology employed was developed by the University of Reading, UK. The document may be viewed by clicking here.