Property prices in Cyprus continue falling, latest RICS index shows

Residential property prices in Cyprus continued to fall in the final quarter of 2014 but some local agents are reporting an increase in sales.

Average price of houses fell by 1.1% and apartments by 0.7%, according to the latest index from the Royal Institute of Chartered Surveyors (RICS). 

The country’s property market was particularly badly hit during the global economic downturn of 2007 and since the RICS index was first published in 2010 house prices have fallen by an average of 30% and apartment prices by 40%.

The largest quarterly falls were in Famagusta where house prices fell by 3.6% and in Nicosia where apartment prices were down 1.1.

Compared to the fourth quarter of 2013, the average price of an apartment has fallen 5% and the average price of a three bed home is down 5.4%.

RICS said that sales have rebounded but prices are expected to continue falling in 2015. The situation is not helped by a strict lending regime following the island’s banking crisis and high interest rates.

‘The market is affected by increased property taxes and the issue of foreclosures on mortgaged properties, preventing the market from stabilising,’ said a spokesman.

Rental values are also still on a downward trend, with house rents down 0.2% and apartment rents down 1.3%.

‘During the fourth quarter of 2014 the Cyprus economy showed some signs of stability, with the economy’s performance being better than expected and tourism mildly outperforming forecasts. Unemployment remained at a historical high level, stabilised at around 17%, and discussions were ongoing regarding privatisations of state owned enterprises and the foreclosure bill,’ the RICS report says.

‘Given prevailing economic conditions and the turbulence in Cyprus’ banking system, there were few transactions during the quarter although volume was higher on a year on year basis. Local buyers in particular were the most discerning as the increase in unemployment and the prospects of the local economy maintained the lack of interest,’ it explains.

‘Furthermore, those interested were unable to access bank finance. The Property Price Index has recorded falls in almost all cities and asset classes, with significant falls being recorded in Nicosia. Nicosia is clearly feeling the impact on the government and banking sector, the two sectors who dominate the local employment market, whilst other cities are progressively bottoming out,’ it adds.

According to local property firm Fitzgerald Marketing, sales increased by 20% in 2014 compared with the previous year, but it is local people who are buying again as the international market has not really picked up since the global economic downturn.

The firm believes that as property prices have reduced significantly, up to 40% in popular areas such as Paphos, buyers could be keen to grab themselves a bargain in 2015. 

It is thought that with the discovery of oil and gas fields in Cypriot waters, as oil companies set up their offices thousands of workers will arrive in two to three years, all in need of homes.

There have been tales of expats leaving because of the cost of living and a lack of jobs but one couple who bought their dream home in Cyprus 10 years ago are happy to stay. Terry and Debbie Emery live in a village near Limassol and said although it is more expensive there is a lot of new investment.