Property prices continued to fall in the third quarter, according to the RICS Cyprus Property Price Index, that showed significant reductions in all major urban areas, with sale and rent prices dropping.
Nicosia and Limassol are in the worst position, as these were the least affected areas until the second half of 2012, said the index, compiled by the Royal Institution of Chartered Surveyors (RICS) Cyprus in collaboration with the association of quantity surveyors (SEEOKK) and the property valuers’ association (SEEAK).
Prices for houses and flats recorded a quarterly decrease of 1.0% and 2.7%, respectively with the largest decrease in Limassol (3.0% for houses) and Larnaca (5.2% for apartments).
Prices fell by an average of 2.9% for shops, 3.6% for offices and 4.3% for warehouses.
Compared with the corresponding quarter of 2012, apartment prices fell by 14.6%, prices for houses dropped by 11.1%, for stores by 20.2%, for offices by 13.2% and for warehouses by 16.2%.
The average rental rate across Cyprus saw a quarterly decline of 5.2% for apartments, 5.4% for homes, 12.0% for stores, 7.1% for warehouses and 8.8% for offices.
Rental rates in the third quarter of 2013 declined by 4.1% for apartments, 4.9% for houses, 9.1% for stores, 4.5% for offices and 3.1% for warehouses, compared with the year-earlier quarter.
Sales prices and rents in Famagusta area recorded a marginal increase, with prices stabilising at low levels.
According to RICS Cyprus, the parallel decline in prices and rents indicates a scene of stability and reduced yields compared with other countries.
“The third quarter saw the full impact from the bail-in and capital controls imposed on banks as part of the Eurogroup decision in March, with financing and deposits blocked during this period,” said Pavlos Loizou, MRICS.
“Local buyers were far more cautions as the worsening state of the economy and rising unemployment caused a drastic fall in interest, while potential buyers had no access to their own funds,” he said.
On the other hand, Charalambos Petrides, MRICS, chairman of the property valuers association, said that “the Cyprus property market is effectively in a state of recession, evident from the excess supply of real estate and the continued fall of sales since 2009.”
“The biggest supply is in mass-production development projects in uncompetitive areas, characterised by average-to-low standard properties without any significant architecture or design. This phenomenon does not exist at high-quality projects in ‘good’ areas.”
Petrides said that it is too early to make any projections on property prices in the future due to the uncertainty in the global and local markets, even though the downward trend of prices is expected to continue in 2014, but not at the same rate as in 2013.
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