Real estate stakeholders are concerned over the immediate prospects of the construction sector and warn against being duped by an upward trend in property sales, as the war in Ukraine will harm the industry.
According to the data published by the Land Registry Office, real estate sales increased by 40.1% in the first four months of 2022 compared to the same period last year.
Even more encouraging, compared to pre-pandemic levels in 2019, an increase of 15.3% was recorded from January to April.
Nevertheless, the data indicate a slowdown in the property market. The number of sales documents submitted increased by 13% in April, compared with a 33% increase in March, 63% in February and 67% in January.
Bank of Cyprus Financial Research director Ioannis Tirkides told news site Stockwatch: “We are currently witnessing an upward cycle launched in April 2020 due to a supportive framework of fiscal measures to deal with the pandemic and low-interest rates.”
The government had extended an interest rate subsidy scheme for housing and corporate loans until the end of 2021 and raised the ceiling for eligible loans. The scheme, however, has come to an end.
The scheme provided for the subsidy of interest of 1.5% for four years.
Tirkides said the upward trend until April is likely to come to an end, due to the hike in the prices of raw materials, as a result of the war in Ukraine.
“But we cannot draw this conclusion based on the data so far.”
The head of the department of Delfi Analytics at Delfi Partners & Company, Zafeiria Stathogiannakou, said the Cypriot real estate market is moving at a pre-crisis pace.
“This upward trend proves the resilience of the Cypriot real estate market despite the socio-economic consequences of the pandemic and the prolonged geopolitical tension in Ukraine,” noted Stathogiannakou.
She, however, pointed out that due to Cyprus’ close relations with Russia and Ukraine for tourism and investment, there is a risk the current positive trend in the real estate market will overturn.
“The duration of the hostilities will be the key both on a humanitarian and economic level.”