Filenews 22 January 2022 - by TheanoThiopoulou
Apartment prices go up and house prices are falling due to the preference of domestic buyers and investors. The central data for the house price index are revealing about the trend prevailing in the real estate market and how the trends are shaping up.
Preference in the purchase of an apartment as a first home appears because of the new data that are formed in the market and specifically because of the interest subsidy for housing loans by the state and the increase observed in rent prices. "It seems that the interest of the domestic market both for investment purposes and for the acquisition of a first home leads to a significant increase in the real estate market, especially with regard to apartments and small houses. According to unofficial estimates by real estate experts, the majority of the transactions carried out in the real estate market concern apartments and small new residences by buyers who wish to take advantage of the state interest subsidy for housing loans, as well as the low interest rates on housing loans granted by banks.
Central notes that "the rise in the cost of construction materials continues to contribute to the increase in the price level, since it is now noticeable in all sectors of construction activity". In the bulletin, Central states that "the fact that the wave of price rises in basic building materials increases property prices regardless of demand, makes the continuous monitoring of the market necessary to determine whether demand will be affected. Any impact on demand will readjust the upward trend observed so far in the sector, despite various other problems faced in the market, such as epidemiological developments and pressures from the existing effort to dispose of real estate from the portfolios of banks and credit acquiring companies to the market.
It is also noted that "according to unofficial estimates by real estate market experts, the demand for real estate by foreign investors, which in fact concerns a lower value of real estate compared to previous years, which is related to the interruption of the Citizen's Service Centre (KEP)," also has stabilised.
In relation to the cost , "house prices decreased on an annual basis of 0.3%, while on a quarterly basis they recorded a small increase of 0.3% which is mainly due to increases in the districts of Larnaca and Paphos. In contrast, apartment prices increased by 1% quarter-on-quarter and by 4.5% year-on-year." Central reports that the increase that continues in the third quarter and is observed in apartment prices confirms once again, among other things, the continued preference of domestic buyers and investors for apartments, compared to homes in most of the provinces of Cyprus.
Regarding the annual changes in the house price indices per district, an increase was recorded in Limassol, Larnaca and Paphos, while in the remaining areas decreases were recorded. Specifically, in Limassol house prices increased by 2.9%, in Larnaca by 2.9% and in Paphos by 1%. On the contrary, in Nicosia prices continue their downward trend, showing a decrease of 1.2% year-on-year, and in Famagusta 0.7%.
