CYPRUS: Residential property prices index rises for eighth quarter

The increase in residential property prices remains moderate the Central Bank of Cyprus (CBC) said despite the index marking eight consecutive quarters of growth in Q2 2018.

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In the second quarter of 2018, the residential property price index, compiled by the CBC (houses and apartments) rose by 0.3% with the index of houses and apartments rising by 0.2% and 0.7% respectively on a quarterly basis.

On an annual basis the residential property index rose by 1.7% in Q2 2018.

Prices in all districts were up with the exception of Paphos which registered a marginal reduction of 0.2%

“The real estate sector in Cyprus follows a positive course. The prices show increase which are however moderate except in certain areas,” the CBC said.

 Residential property prices in Limassol, especially in apartments, showed significant increases for five consecutive quarter notably in the coastal areas where price growth is the largest compared with all other areas of Cyprus.

The CBC attributes this significant rise to the fact that; Limassol is the most densely populated district in Cyprus, the Cyprus University of Technology is in the town centre, demand for apartments from Airbnb, the construction of the marina and the decision of the government to operate the island’s main casino there.

Price hikes in Limassol are also affected by the purchases of residential properties by foreigners in the context of the Citizenship by Investment Scheme. These purchases are not financed by the banking system, so are not factored in the CBC residential property index.

But the CBC has warned of a possible rise in supply of mainly commercial real estate due to the reform in the legal framework governing foreclosures and the approval of the law on loan securitisation which may lead to the reduction of non-performing loans in Cyprus but could also increase the supply or real estate.