Sunday, November 14, 2021

PROPERTIES - WHAT ARE THE RENTS AND SALE PRICES IN 2022

 Filenews 14 November 2021 - by Theano Thiopoulou



The purchase of an apartment or house is expected to remain stable in 2021 prices in 2022, a trend that is expected to pass in rents as well, following the upward trend they showed in the previous period.

For many who want to buy a house, the question that concerns them is where the prices of real estate will reach next year, mainly due to the increase in building materials or, for those who intend to rent, where the rents will go. And of course, those who intend to buy an apartment or house, should keep in mind that from next year they will have to bear all the costs, because at the end of this year the state subsidy of the housing loan up to € 300,000 ends.

Based on the data obtained by "F" from Danos and Associates office, prices for apartments and residences will not hold any surprises in 2022. As the office clarifies in its report "the forecasts for prices are depending on the location, view, age and other particular characteristics and specifications of the properties. They are relative and not absolute."

In Nicosia, the average rental rates for an apartment or house per square metre will be between €8 to €10. That is, for an apartment or residence of 100 square metres, the rent is between €800 to €1,000. 2022 prices are estimated to remain at the 2021 level. In fact, the upper rent price for next year is lower than this year. In fact, next year the rental prices of apartments and houses in Nicosia, based on the forecasts of Danos and Associates office, return to the levels of 2019 and 2020

In the Famagusta district, the average cost of rent or apartment for 2022 is projected based on the estimates of Danos and Associates office to be stable at the levels of 2020 and 2021, at €4 to €5 per square metre. For an apartment or house of 100 square metres, the average rent is €400 to €500, half the price compared to the rents in Nicosia. As shown by the data (table), Famagusta district has not had large fluctuations in prices since 2013.

In the District of Larnaca, the average rents for apartments will remain stable in 2022, at €4 to €5 per square metre, as it was in 2021, 2020 and 2019. The rental cost for an apartment in Larnaca, of an area of 100 sq.m., is between €400 and €500, at half the price compared to the rent in Nicosia.

At the same levels are the prices of rents of apartments and residences in Paphos. The average rent in 2022 is expected to stay at the same level in 2021.

The exception is made by Limassol, with the average cost of renting apartments and houses increasing in 2022 compared to 2021. The rent per square metre is projected by Danos and Associates office to be between €7 and €14 in 2022 compared to a cost of €6 and €12 per m in 2021. For an apartment of 100 square meters, the average rent is depending on the area and the construction of €700 to €1,400.

Constant sales prices

The sale prices of apartments and houses, based on today's data, do not seem to hold any surprises in 2022, compared to 2021 and the upward trend is freezing. Danos & Associates estimates that the average prices for sales of apartments and houses in Nicosia will remain between €3,000 and €4,500 per square metre, as it was in 2019 and 2018.

In 2020, based on the data, there was a slight decline and the average reached between €3,000 and €4,000. In Famagusta district, forecasts for the sale prices of apartments and houses in 2022 remain at the same level as in 2021. The average is projected to be between €3,000 and €4,000 per sq.m, remaining stable from 2019.

In the district of Larnaca, the average cost of selling apartments and houses in 2022 is expected to be €2,300 to €3,000. The maximum value will be slightly lower than in 2021 and will return to 2019 and 2020 levels.

And in the Pafos district, the average sale of apartments and houses is projected to be at the levels of 2021 and 2020, i.e. €1,500 to €2,500 per sq.m. In Limassol, apartment sale prices are projected to decline slightly in 2022 compared to 2021. The average sale is expected to be €3,500 to €5,000 from €6,000 a sq.m. that was the maximum in 2021 and 2020.

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Trends in Europe

The demand for real estate does not seem to stop, not only in Cyprus but also in Europe. Based on the Consumer Expectations Survey, published by the European Central Bank last week, higher-income households are much more likely to buy a house or apartment in the next 12 months than lower-income households and are therefore likely to provide stronger support for housing demand. Respondents who plan to buy a home in the next 12 months tend to have significantly higher expectations of income growth than those who do not intend to do so.

Moreover, it is not only Cypriots who buy apartments or houses from their savings, but also the rest of the Europeans. According to the survey published by the European Central Bank, depositors have generally had the highest share of home buyers in the last 12 months. When also asked about the reasons for saving, 36% of savers reported that "the increase in my household's expenditure due to a large market I had planned myself/is (e.g. home, car, etc.)" was significant or very significant. This suggests that, at least to some extent, accumulated savings may have already been used for housing purchases. As factors that increase the demand for housing, survey respondents highlighted, among other things, expectations of easier access to loans in the future and a reduction in mortgage rates.

The Central Bank in the latest report on the property price index had stated that "Cypriots invest more in smaller houses and apartments in all cities, thus giving support to prices. This is partly attributed to the fact that part of the population's savings end up in the purchase of property, either for owner-occupied or investment purposes. The increase in the cost of construction materials also seems to have played a role in maintaining the price level. At the same time, the demand for real estate by foreign investors shows signs of stabilization, as recorded in the sales documents, which is due, according to market factors, among others, to the promotion of investments and the program for obtaining a permanent residence permit in Cyprus.


Low interest rates and lending rate

The positive for buying an apartment or house is that interest rates have fallen significantly and fallen below 3%. The average market rate for APR (Total Annual Rate of Charge) was 2.50, compared to 2% in September last year and 2.59% in 2019.

Banks do not grant the full amount for the purchase of a house and depending on the profile of the client the financing can be up to 70% of the value of the property. The instalment is depending on the repayment years and the amount of the loan. For example, for a loan of €150,000, a repayment period of 15 years and an average interest rate of 2.50%, the instalment is approximately €1,000 per month. If the repayment period is increased to 20 years, the instalment is reduced to €800 per month.