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House prices are falling, but apartment values are rising

Despite the fact that house prices are falling, apartment values are rising

Due to a minor fall in house prices and a rise in apartment values, the residential Cyprus property price indexes slowed in the second quarter of 2021.

According to the Cyprus Central Bank’s Residential Property Price Index (RPPI) report for Q2, a quarterly gain of 0.3 percent was reported, up from 0.5 percent in Q1 2021.

On an annual basis, it increased by 0.2 percent from 0.9 percent the previous quarter.

“The price of houses presents a different picture than the price of apartments, with the former showing a decrease while the latter shows an increase,” the research states.

According to the Central Bank, housing prices fell by 0.3 percent and 1% on a quarterly and annual basis, respectively.

Apartment prices, on the other hand, grew by 1.3 percent quarterly and 3% annually.

This pattern was observed in all areas except Limassol, which had an increase in home prices, while Paphos saw an annual decrease in apartment prices.

The increase in apartment prices, according to the Central Bank, indicates local purchasers’ and investors’ ongoing appetite for flats over homes in most regions.

According to the report, Cypriots prefer to invest in smaller homes and apartments. It is ascribed to the fact that savings are directed toward the purchase of real property, either as an investment or for personal use.

Furthermore, the rise in the cost of construction materials has helped to keep prices stable.

The Central Bank stated in the sales documents that investor demand for property has stabilized as a result of investment promotion and the government’s scheme for foreigners to get permanent residence permits in Cyprus.

Property sales are increasing across the board

According to numbers released by the Department of Lands and Surveys, property sales increased across the board in September compared to the same month last year.

Domestic sales

 which accounted for 63 percent of total transactions in September, increased by 9% compared to September 2021 and 41% compared to September 2019.

With the exception of Famagusta, where sales were down 7% from the previous year, the remaining four districts saw increases.

Limassol saw a 21% increase in sales, followed by Larnaca (9%), Nicosia (3%), and Paphos (3%). (1 percent )

In all districts, sales have increased year over year. Paphos (59%) is the most popular destination, followed by Famagusta (54%), Limassol (47%), and Larnaca (47%). (34 percent ).

The government’s interest rate subsidy scheme, which will last through the end of 2021, has boosted sales to the domestic market. In February, the maximum loan amount for home acquisitions was increased from €300,000 to €400,000, with a 1.5 percent interest rate subsidy for a four-year term.

However, keep in mind that the data include an undocumented number of ‘non-sale’ agreements between banks and failing borrowers, such as loan restructurings, recoveries, and debt-to-asset swaps, in an effort by the banks to lower their non-performing loan portfolios.

Sales in other countries

Property sales to the international market, which represented for 37% of all transactions in September, increased by 30% compared to September 2021 and 19% compared to September before COVID.

Sales climbed in the remaining four districts, with the exception of Paphos, where they fell by 2%.

Sales in Larnaca increased by 86%, followed by Limassol (38%), Famagusta (31%), and Nicosia (31%). (29 percent ).

On an annual basis, sales in Nicosia increased by 63 percent, followed by Larnaca (29 percent), and Limassol (almost unchanged), despite sales in Paphos falling by 7% and Famagusta remaining almost unchanged (15 percent ).

Sales to European Union nationals

Sales to the EU part of the outside market, which represented for 17% of total sales in September, increased by 30% from September 2021 and by 45 percent from September before COVID.

All of the districts saw an increase in sales. Famagusta led the way with a 267 percent increase in sales, followed by Larnaca (86 percent), Nicosia (36 percent), Limassol (8 percent), and Paphos (8 percent) (2 percent ).

The number of homes sold to EU citizens has increased in all areas on an annual basis. Larnaca (81%), Nicosia (73%), and Limassol (73%). (43 percent ). Paphos (31%) and Famagusta (31%). (30 percent ).

Non-EU citizens are targeted for sales

Sales to the non-EU part of the international market, which represented for 20% of total sales in September, increased by 30% over September 2021 and 3% over pre-COVID September 2019.

Sales plummeted 30% and 8% in Famagusta and Paphos, respectively, but surged 86 percent in Larnaca, 66 percent in Limassol, and 14 percent in Nicosia.

Sales in Paphos and Larnaca are down 37 percent and 22 percent, respectively, on a year-over-year basis. However, sales in Nicosia have increased by 49%, while sales in Larnaca and Limassol have increased by 10% and 2%, respectively.