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Alarm bells over house prices

The Central Bank of Cyprus has sounded alarm bells over rising house prices, particularly in Limassol, due to the Invest Citizenship scheme and has highlighted the need for vigilance.

Alarm bells over house prices in CyprusTHE CENTRAL Bank of Cyprus (CBC) called for vigilance and close monitoring of rising house prices principally in Limassol that are being pushed skywards by the Invest Citizenship scheme.

The residential property price index compiled by the CBC for Q3 2018 marked a moderate increase of 0.3% compared with the previous quarter, whereas its annual growth amounted to 1.6%.

However, prices of flats in the coastal town of Limassol climbed by 8.7% year on year, the highest of all towns, and 2.9% compared with the previous quarter, marking continued growth associated with the island’s passport for investment scheme.

In Q3 2018, prices of apartments in Paphos climbed 5.2% year on year, in Famagusta by 5%, in Larnaca the increase was 2.7%, whereas in the capital of Nicosia the increase stood at 1.2%.

“Despite the moderate average price growth, the growth momentum particularly in Limassol highlights the need for close monitoring of the developments and vigilance,” the CBC said.

Buying real estate is one of the investment scheme’s most popular criteria among foreign investors interested in acquiring a Cyprus passport, with the CBC noting that property purchases are funded with cash and not with loans provided by the Cypriot banking system.

“Strong price pressures, which were analysed in the previous Index seem to affect coastal areas of Limassol,” the CBC said.

It said that prices of flats in Limassol recorded significant increases which are manifestly higher than other areas in Cyprus, while prices of apartments have accelerated faster than house prices – evident by the number of luxury towers going up along the coast.

The CBC noted that residential house prices in Famagusta and Paphos – where foreign demand has an effect – recorded significant increases compared with Nicosia, where price increases were subdued.

In 2017, 5,517 individuals were granted Cyprus citizenship – an 18% rise since 2016. Of these 23.8% were Russians, 9.1% were UK citizens and 8.7% were Ukranians.

Readers' comments

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  • MartynG says:

    Right with you ‘sky’ on this….

    ‘close monitoring of the developments and vigilance,” (re Larnaca) the CBC said.

    Ha-HA – means virtually nothing….. maybe it was the Children’s Breakfast Club that suggested it?

    THAT SAID – there seems already over recent months to be some ‘cooling’ of the price increases in Limassol, Seller’s high increases in Asking Prices on typical apartments don’t seem to be being met….. with many ‘hopeful’ sellers being very disappointed.

    ….likely then: largely those requiring Zero funding and acquiring ‘Top End’, in many cases, on apartments not even started, let alone finished!, via the Passport < Investment ‘scheme’…..which of course the EU have recently focussed upon, not just in Cyprus, elsewhere within EU, focussing more closely due to concerns about potential money-laundering’ and such.

    (The biggest problems with the ‘mega’ multi-storey (up to 50 floors!) new Limassol Seafront palaces, most we hear still awaiting ‘planning consent’ in what seems to be an absence of Planning generally! Is that once, if ever, ‘completed’ will likely see Owners being absent for many, maybe ‘most’, months each year, many vacant and unsold units, and, er, who will be covering the hefty ‘Management Charges’ we might ponder?).

    Beyond the above, it seems an expectancy is that the much-vaunted Limassol. Super-Casino, not yet even started building, will drive Demand up, sometime in the future.

    Might all be a case of another ‘Don’t hold your breath!’

  • Steve says:

    The Central Bank of Cyprus has a short memory.

    From 2000-2008, prices were far, far higher than they are now. 3 bedroom apartments, like mine in the Polis/Laatchi area that were selling in 2004 for CY£130,000 (= €222,000) are valued now at €130000, 58% of the purchase price.

    I don’t recall any Central Bank alarm bells being sounded in 2007/2008, when property prices had soared to their peak.

    Ed: Since the boom the banking sector has been transformed.

  • Deanna says:

    Just to say I endorse the response by Sky. These ‘warnings’ are just disguised advertising.

  • sky says:

    What’s the point of those “warnings”???

    The CBC “warns” against rent hikes, houses prices and…so what?

    “Despite the moderate average price growth, the growth momentum particularly in Limassol highlights the need for close monitoring of the developments and vigilance prices”

    ??? and…? what is going to happen after? the law of supply and demand? waow..thank you CBC, what people would do without you…

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