THE TWENTY-NINTH publication of the RICS Cyprus Property Price Index reports that the average price of residential apartments and houses across the island rose by 0.7% and 1.7% respectively during the fourth quarter of 2016.
During the fourth quarter of 2016 the Cyprus economy showed further signs of stability, with a seasonally adjusted quarterly GDP growth of 0.7% and an annual seasonally adjusted GDP growth of 2.9%. Unemployment remained at relatively high levels, on a downtrend to ca 13% (from the high levels of 17%).
Given prevailing economic conditions and the marginally improved confidence in the Cyprus banking system, there were relatively higher transactions during the quarter.
Financial institutions, despite their NPLs, have been more willing to provide access to finance and there is a sluggish interest from locals.
The Cyprus Property Price Index has recorded increases in almost all cities and asset classes, with significant increases being recorded in Larnaca area, whilst other cities are progressively bottoming out.
Larnaca recorded the biggest quarterly increase in apartment prices (3.3%), while the largest rise in house prices (1.8%) was recorded in Limassol.
The value of holiday homes rose 2.3% for apartments and 2.2% for houses.
Compared to the fourth quarter of 2015, apartment prices have risen 3.7%, house prices have risen 3.4%. Prices for offices, retail and warehouses have risen 4.7%, 2.1% and 1.9% respectively.
Since RICS (Cyprus) launched its property price index in the fourth quarter of 2009, the value of residential apartments has fallen by approximately 38%, while the value of residential houses has fallen by roughly 28%.
Across Cyprus, on a quarterly basis rental values increased by 1.8% for apartments, 2.9% for houses, 5.3% for retail, 4.6% for office and 4.4% for warehouses.
Compared to the fourth quarter of 2015, apartment rental values have risen 6.6% and house rental values have risen 8.7%. Rental values for retail, offices and warehouses are up 4.9%, 7.9% and 3.5% respectively.
All asset classes have shown a consecutive quarterly growth.
At the end of the fourth quarter of 2016, average gross yields stood at 4% for apartments, 2.1% for houses, 5.3% for retail, 4.4% for warehouses, and 4.6% for offices.
The parallel reduction and/or stabilisation 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.