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Property prices are skyrocketing due to rising costs

soaring as a result of growing costs

In the first half of the year, building material prices in Cyprus skyrocketed, pushing construction costs to new highs and pushing property prices even higher.

This rise has also made it more difficult for the real estate and construction sectors to recover following the cancellation of the “golden passport” scheme and the aftermath of the coronavirus pandemic.

Steel, cement, sand, stone aggregates, and wood-based components have all seen considerable price increases in the last seven months, as have other essential items including steel, cement, sand, and stone aggregates.

In comparison to the same period last year, this has increased overall building costs by 7.38 percent.

Real estate analysts believe that the growing trend will cause property values to skyrocket, sending shockwaves through the market and halting building and sales of new development projects for the time being.

Availability chain interruptions caused by the Covid-crisis and pre-existing geopolitical hostility reduced the supply of building materials at the same time that output remained stable during the epidemic.

Geopolitical factors, as well as the newly created alliance between the United States, the United Kingdom, and Australia, have cornered China, which is feeling the strain of imposed constraints.

that Australia has been an ally of China’s economic rebirth since 2000, sending 85 percent of its ores to the country. He added that this relationship helped Australia to emerge unhurt from the global financial crisis of 2008, while China became a major participant in the global manufacturing of final products (steel and iron).

The newly created partnership, however, has exacerbated tensions between the two countries. As a result of the crisis, he added, there are trade restrictions, lower output, and higher final product pricing.

Inflationary shipping costs, spurred in part by COVID-19 and geopolitical issues between the west and China, have also pushed up building material prices.

Furthermore, the epidemic has resulted in a significant increase in freight shipping costs, particularly from Asia to the West. The average cost of a container has risen from €1,500 before the outbreak to €10,000.

Increased demand for containers, combined with the need for more port staff and the industry’s general inability to meet massive demand, has resulted in a significant increase in transportation prices for both raw materials and finished goods.

This increase will obviously be passed on to the end user, which in this case is the building industry. According to developer reports, the final price of a property could rise by 22%.

Construction projects are behind schedule

What this means for Cyprus is that the economy will suffer yet another setback, with a number of projects in the works being halted, and purchasing real estate property will become even more difficult for some.

Cypriots looking to buy a home will be temporarily put off from doing so, deferring their goal for at least a few months in the expectation that prices will fall again.

that some young couples intending to purchase a home with the help of a bank loan will have a more difficult time obtaining financing now that property prices would definitely rise.

that while no agreements have yet fallen through in the real estate sector, they predict a market freeze as purchasers are unsure what to make of the situation.

According to the Financial Mirror, the cost of building has increased by 29% since 2020, because to rises in transportation and COVID, which have driven up the cost of construction supplies.

As he noted, ongoing projects will be harmed as a result of the decision, with numerous projects being put on pause.

Constructors of continuing high-end property housing projects will confront a big difficulty because the majority of apartments have already been sold. The higher cost will be borne by the contractors, he said.

In the case of newer projects, the expense will almost certainly be passed on to the eventual consumer, the property buyer.

The instability in the market, on the other hand, is only temporary, with property prices stabilizing by the end of next year.

Prices have risen as a result of geopolitical developments that have affected transportation costs. Not to mention Brexit and the coronavirus pandemic, according to Danos.

Prices will deflate once the crest of these tidal waves has passed.

that prices are being pushed up not only by growing building material costs, but also by increased demand as a result of the coronavirus pandemic and the crisis.

Increases have an effect on city properties

Prices of primarily city properties, such as building sites, offices, and new housing projects, have been rising.

that the crisis has struck at an inconvenient time for the industry, just as demand had begun to pick up.

There are a lot of people with money who are looking for a new home or an investment opportunity. We’ve also had interest from foreign Real Estate Investment Trusts (REIT) looking to invest in profitable buildings in Cyprus, he explained.

When asked if the increase in the cost of building materials will offset the market to the point where lowering prices will be a problem in and of itself, he responded that there is now some downward pressure on pricing from property already on the market.

The market is currently being pressed by properties that are already on the market, particularly those owned by banks. Housing units and offices acquired by banks mostly through debt-to-asset swaps are being sold at steep discounts because the banks need to sell them, he said.

This pressure, however, will be short-lived because banks currently have a modest portfolio of such properties, and we’re not talking about prime real property.

Buyers now are looking for new, modern, energy-efficient buildings, and they appear to be optimistic that the market will stabilize in 2022.

Things are already looking good, with the European Union anticipating a boost in GDP and an increase in tourism in 2022.