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25th February 2024
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HomeArticlesThe ripple effect of Limassol's real estate

The ripple effect of Limassol’s real estate

The ripple effect describes how property prices in one area influence those in others, as seen with London’s impact on the UK market, whereby changes in house prices in the UK are noted first in London before being observed in other regions.

In price booms, for example, house prices have tended to rise first in London and then gradually, over time, the other regions have caught up. The same applies when prices decline. Simply put, the areas closest to London are the first to feel the warmth or chill of change. A kind of domino effect, if you like.

Few reasons contribute to this phenomenon. Once an area becomes desirable, people are priced out and begin to search further afield while still trying to stay close to their original area. The cycle continues and people keep moving further out, and so the ripple goes further and further.

It is considered that areas regarded as financial centres, such as London, have better and quicker access to information regarding house prices. Moreover, participants in such housing markets are influenced to a larger degree by the performance of foreign markets, leading to more rapid changes in economic activity. It’s no coincidence that the epicentre of a ripple effect is typically an economic centre.

The business centre of Cyprus is evidently Limassol. It’s reasonable to assume that any house price changes will occur first and most notably in Limassol before spreading to other regions in both directions.

Our team analysed the Central Bank of Cyprus – Residential Price Index data on a year-over-year (YOY) percentage change quarterly, uncovering intriguing indications related to the ripple effect in Cyprus.

In Limassol, regarding apartment price trends, there was an initial noticeable increase in early 2017. This increase initiated a ripple effect that spread to other regions of Cyprus about 1 year later, on average.

When comparing apartments and houses, it appears that apartment price trends