Filenews 18 July 2024 - by Theano Thiopoulou
The reduced demand for real estate from foreign buyers and the high mortgage rates that reduce demand from domestic buyers, decompress the upward trends observed in real estate prices in previous quarters.
The Central Bank in its report on real estate prices outlines the picture of the real estate market, explaining the reasons that affect them and the trends created. As a general comment, it states that there was a slowdown in house price growth rates in the first quarter of 2024.
In addition, declines in construction material prices, combined with increasing construction activity and the bringing of more housing units to the market, are helping to normalise supply and also contain upward price pressures. As a result, residential real estate prices are expected to show smaller increases in the near term.
Specifically, the index of expectations for property prices over the next three months reached an average of 60.6 in the first quarter of 2024, recording for the seventh consecutive quarter a decrease from the historical high levels of the second quarter of 2022. The majority of respondents expect property price increases to continue, but their share has decreased compared to previous quarters. An important element recorded in the Central Bank's report that overturns the data that applied in the previous period, concerns Limassol.
Technocrats note that housing supply now seems to be meeting demand in Limassol, with the result that the availability of homes for rent and sale has increased. The increased supply of housing, combined with the decline that construction costs continue to record year-on-year, are expected to reduce pressure on rising prices, according to the Central Bank.
However, developments in the real estate market seem to vary by province. In Limassol the increasing supply seems to be meeting demand, but in Larnaca and Paphos supply remains subdued, with demand continuing to rise. In Nicosia there seems to be an increased supply of housing while in free Famagusta supply is still limited, although new modern residential units are gradually entering the market.
House prices per district, on a quarterly basis, recorded an increase in Paphos and Famagusta (3.3% and 2.6%, respectively), while they recorded a slowdown in Limassol, Larnaca and Nicosia (0.3%, 1.1% and 0%, respectively).
On an annual basis, only Paphos recorded an acceleration in house prices (an increase of 7.1%), with the rest of the districts recording a slowdown (increase in Nicosia, Limassol, Larnaca and Famagusta by 3.6%, 3.9%, 6.6% and 10.6%, respectively).
According to the Central Bank report, apartment prices on a quarterly basis recorded a slowing increase in all districts, except Famagusta where the increase accelerated.
Specifically, in Nicosia apartment prices increased by 0.8%, in Limassol by 3.7%, in Larnaca by 4.3%, in Paphos by 3.5% and in Famagusta by 10.7%. On an annual basis, apartment prices accelerated their increases in Limassol, Larnaca and Famagusta (by 16.5%, 18.1% and 16.5%, respectively). Apartment prices in Nicosia and Paphos recorded a slowdown in increases (5.1% and 21.4%, respectively).
