THE TWENTY-fifth edition of the RICS Cyprus Property Price Index issued yesterday reports that the average prices of residential houses and apartments in Cyprus fell by 0.1% and 0.5% respectively over the fourth quarter of 2015.
Across Cyprus, changes in residential property prices over the quarter were mixed:
Limassol saw the largest fall in apartment prices (-1.4%) followed by Famagusta/Paralimni (-1.4%) and Nicosia (-0.8%), while apartment prices in Larnaca rose 0.8% and remained unchanged in Paphos.
House prices in Nicosia fell 0.8%, while prices in Paphos rose 0.6%. House prices in Limassol, Larnaca and Paralimni/Famagusta were unchanged.
Compared to the fourth quarter of 2014, the average price of a residential apartment has fallen by 1.6%, while the average price of a 3-bed semi has fallen by 0.3%.
Rental values
Across Cyprus, on a quarterly basis rental values increased by 0.5% for apartments, 1.1% for houses and 0.2% for offices, while rental values for retail units and warehouses fell by 0.2% and 1% respectively.
On an annual basis rental values for apartments and houses rose by 0.3% and 0.8% respectively.
Gross yields
At the end of the fourth quarter of 2015 average gross yields stood at 3.9% for apartments, 2% for houses, 5.2% for retail, 4.3% for warehouses, and 4.5% 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.
Prepared by RICS Cyprus in conjunction with the Cyprus Association of Quantity Surveyors (SEEOKK) and the Cyprus Valuers Association (SEEAK), the quarterly RICS index monitors property prices and rents in all districts using a methodology developed by Reading University in the UK.
Residential property prices
Since the first RICS Cyprus Property Price Index was published for the first quarter of 2010 residential house prices have fallen by an average of 30.1%, while those of apartments have fallen 40.9%.
The charts below plot the price changes in each of the districts since the Index was first published.
(Note that the RICS Cyprus Property Price Index does not include prices of holiday homes and all properties used to construct the Index have clean Title Deeds.)
RICS (Cyprus) plans to expand its coverage to include apartments and houses in tourist areas.
The ‘postnote’ tells us these figures are related to property with ‘clean’ Title. In which case, we still have a long way to go.
(Editor’s comment: One further thing that needs to be considered is the sale of properties that have been repossessed by the banks, which will be offered for sale initially at 80% of their market value. If the properties cannot be sold at 80% of their market value, the price will be further reduced.
These sales will have the effect of further lowering market values regardless of whether the properties have deeds.)