Across Cyprus, residential prices for both houses and flats increased in the third quarter last year by 0.6% and 0.9% respectively, according to the Property Price Index, with the biggest increase being in Limassol, 1.4% for flats and Paphos (1.77% for houses).
Values for holiday homes increased by 1.6% (flats) and 0.4% (houses). The holiday home Index is published for the second time.
Year on year, compared to the third quarter of 2015, prices increased by 0.6% for flats, 0.9% for houses, 0.9% for offices, while warehouses were stable. An increase of 0.8% for retail was also noted.
This is the twenty-eighth publication of the RICS Cyprus Property Price Index, a quarterly price and rental index which is based on methodology produced by the University of Reading, UK. The Index tracks property and rental prices across all districts and main property types.
During the third quarter of 2016, the economy showed further signs of stability, with the economy’s performance being better than expected and tourism mildly outperforming forecasts. Unemployment remained at relatively high levels, on a downtrend to about 13% (from the high levels of 17%).
Given prevailing economic conditions and the turbulence in Cyprus’ banking system, there were relatively few property transactions during the quarter although volume was higher on a year on year basis. Local buyers in particular were the most discerning as unemployment and high debt for locals maintained lack of interest. Furthermore, those interested are trying to access bank-finance.
The Property Price Index has recorded increases in almost all towns and asset classes, with significant increases being recorded in the Larnaca area, whilst other towns are progressively bottoming out.
Across Cyprus, quarterly rental values increased by 0.7% for apartments, 3.3% for houses, 2.2% for retail, 1.1% for offices and for warehouses by 3.5%.
Compared to Q3 2015, rents increased by 5.3% for flats, 6.7% for houses, 3.9% for retail, 3.5% for offices and warehouses by 2.5%.
The majority of asset classes and geographies are bottoming out and are showing some signs of price stability, the RICS report said.
At the end of Q3 2016 average gross yields stood at 4% for apartments, 2.0% for houses, 5.4% for retail, 4.4% for warehouses and 4.5% for offices. The parallel reduction and/ or stabilisation in capital values and rents is keeping investment yields relatively stable and at low levels (compared to yields overseas). This suggests that there is still room for some re-pricing of capital values to take place, especially for properties in secondary locations.
