THE TWENTY second edition of the Cyprus Property Price Index published by RICS (Cyprus) reveals that the average price of apartments fell by 0.4%, while house prices rose by 0.6% during the first quarter of 2015.
The largest quarterly fall for apartments was reported in Limassol (-1.0%), while the largest rise in house prices was reported in Larnaca (3.0%).
Although house prices in Nicosia continued to fall they remained steady in Limassol and Famagusta – and those in Larnaca and Paphos rose slightly and while apartment prices in Nicosia, Limassol and Larnaca continued to fall, they remained steady in Paphos and Famagusta.
Values of retail premises fell by an average of 1.7%, value of offices fell 0.1% and the value of warehouses rose 1.3% over the quarter.
Compared to the first quarter of 2014, the average price of a residential apartment has fallen 3.2% and the average price of a 3-bed semi has fallen 3.0%. Retail property has fallen by 8.1%, offices by 4.8% and warehouses by 3.2%.
Commenting on the latest figures, Charalambos Petrides MRICS, said “The positive thing seen in the first quarter of 2015 compared to 2014 and 2013, is the 20 per cent increase in marketability on an annual basis,” adding that “It seems that property transactions have recovered and the drop in prices is restoring market activity.”
Mr Petrides expects that property prices will continue to fall during the year but at a slower pace than 2014 due to pending developments in the financial sector related to non-performing loans, foreclosures and stricter loan standards in the banking system.
Rental values
Rental values recorded a quarterly drop of 0.3% for apartments, 1.9% for offices, 0.4% for retail units and 0.1% for warehouses. On a more positive note, the rental value of houses rose 1.2%. 0.2% for houses.
Compared to the first quarter of 2014, rents have dropped 4.0% for apartments, 1.2% for houses, 8.1% for retail premises, 3.5% for offices and 5.9% for warehouses.
Gross yields
At the end of first quarter of 2015 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.
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 and all properties used to construct the index have clean Title Deeds.)
I am not surprised property prices are falling and if the government insist on municipality implementing this pool licence Cyprus Is going to fall into a all time economic crisis. Cyprus is already struggling then they want to close down pools resulting in pool companies needing to close, hence people will be out of work. Less water/electricity bills, property owners not being able to rent out to bring tourism in. Going to kill Cyprus altogether. I wish I had never put my hard earned cash into the island !!!!!
@ Mike
Unless you are a potential buyer why would you consistently complain that house prices are inflated here. Add to that your persistent criticism of the poor quality of build in Cyprus why do you even consider buying here.
To compare prices of 20yrs ago and expect prices to have remained the same is ridiculous. In the UK I bought a house for £50,000 in 1996 and sold it in 2006 for £135,000. That house was not any different when I sold it.
Its true that many houses here (mainly new builds) are in unfinished schemes but it is hardly fair to put all Cypriot houses in the same category.
The infrastructure actually should have no effect on the actual house prices. The infrastructure is directly related to the amount of taxes that the island can generate . If you want an infrastructure similar to the UK e,g you must be willing to pay the extortionate taxes that are paid there for allegedly better infrastructure.
I listen to ex pats all the time complaining about Cyprus and how it is backward, in the dark ages, don’t care about the environment etc, etc.
Then as soon as any improvements are made and the consequent cost is passed on they are the first to complain about paying.
Take parking, 8yrs ago Cypriots (nor me for that matter) did not care a jot where they parked their car. Now, after years of whining ex pats complaining about it, you go into Napa and can’t park anywhere without having to pay. Who complains the loudest? the bl==dy expats.
Perhaps you need to forget about buying a home here as an investment and concentrate on how good life here can be regardless of how much profit you can make.
Be interesting to see what will happen if anastasiades and akinci sort out the ‘Cyprus problem’ will prices tumble even more due to the fact that north opens up and adds more supply?or will it attract more interest investment demand=higher prices……alas most of the problems with the housing market and you can see this by the fact that most of the debt is owed to banks by a handful of developers who basically stocked up on land…these men controlled supply, kept prices sky high and now they can’t sell they are looking for an easy way out…string em up I say
Richard – I base my thoughts on the last 66 years, what property has cost, what I have paid in the past and the fact that nothing much of substance has changed in that time other than cosmetically. I don’t think we are talking Paris, Milan, London or Moscow here it is Cyprus where many roads are still tracks although I accept most visitors or ex-pat residents would live in developed parts of the Island and possibly may not be exposed to the interior.
My belief is the telephone number asking prices are only fuelled by those willing to pay and inward bound money which in turn prompts further increases in asking prices just in case there are buyers willing to pay. I appreciate inflation is commonplace but I feel we do not justify the high prices asked given our infrastructure and that a re-alignment was necessary to promote sales. I predicted the same in 2007 and we did have a drop but just not far enough in my humble opinion.
As an aside in 1994 a 2 bed 120m² single storey home just outside Limassol cost cy£36K including land to build, a 3 bed 2 storey 180m² villa in the East (Protaras) cost cy£34k and my Pajero cost less than cy£5 to fill (at the time 9 to 10 cents per litre for diesel). I accept times change and move on but the infrastructure has not changed that much save for the highway. Hope that explains.
@Mike. I’m just curious as to why you think a further ’30-50%’ (in itself something of an imprecise range) reduction is “close to realism”?
Realism based on what exactly?
It’s not a cynical or facetious question – I’m genuinely interested why you believe there is up to a further 50% fall necessary in the market?
Imagine for a minute if every country’s GDP fell by 50%. 50% was wiped off the value of all worldwide stock markets. Your salary or pension was chopped in half?
What would the fall-out be of such a drop?
I’m no Nobel-prize winning economist (and some who are haven’t made the greatest job of global economic policy) but such a fall would have massive ramifications. Of that – I’m most certainly not delusional regarding….
I was rather hoping prices would tumble another 30 to 50% to bring us to somewhere close to realism for Cyprus. It seems we are aping the North European illusion of over-inflating property prices in the mistaken belief that by doing so we feel wealthier than we are in spite of not having two cents to rub together. Self delusion rules! Oh well, they say a fool and their money are easily parted.