THE THIRTY-NINTH publication of the RICS Cyprus Property Price Index reports that the average price of residential apartments and houses across the island rose over the first quarter of 2019.
During the second quarter of 2019 the Cyprus economy showed further signs of recovery, with a seasonally adjusted quarterly GDP growth of 0.7% and an annual seasonally adjusted GDP growth of 3.2%. Unemployment dropped further to 7.0% compared to 7.2% of the previous quarter and the record high of 17.6% in the first quarter of 2015.
The improved confidence in the Cyprus banking system and the improved availability of finance have consequently assisted in a relatively higher transaction volume during the quarter, which further enhanced market sentiment. However, the issue of non-performing loans (NPLs) and Debt for Asset Swaps (DFAS) by most banks continue to be present in the market.
Quarterly property price changes
Compared with the first quarter of 2019, prices of residential houses and apartments rose by 1.2% and 1.4% respectively. Limassol recorded the largest quarterly increase in apartment prices up 3.87% and house prices up 4.82%.
Prices of holiday homes also rose over the quarter by 1.3% for apartments and 1.8% for houses. Famagusta saw the highest rise in the price of holiday houses – up 2.94%, while Limassol saw the highest rise in the price of holiday apartments – up 2.08%.
Annual property price changes
On an annual basis apartments prices rose 8.1%, houses by 7.7%, offices by 6.0%, warehouses by 3.6% and retail by 4.0%.
On a quarterly basis rental values increased by 4.6% for apartments, 3.2% for houses, 0.9% for retail, 0.2% for offices, while warehouses remained unchanged.
On an annual basis, rents increased by 16.4% for apartments, 14.4% for houses, 7.0% for retail, 4.9% for offices and for 1.3% warehouses.
With the exception of warehouses, all asset classes have shown a consecutive quarterly growth
Gross rental yields
At the end of the second quarter of 2019, average gross rental yields stood at 4.8% for apartments, 2.5% for houses, 5.7% for retail, 4.1% for warehouses, and 5.0% for offices.
The gross rental yield is a useful yardstick as to whether property is over-valued, under-valued or priced correctly. Here is a set of rules of thumb for the housing market from the Global Property Guide: