Cyprus house prices see only drop in EU

Cyprus house prices fell by 4.8% last year, the only annual drop recorded by any EU country in the fourth quarter of 2019, according to Eurostat data on Wednesday.

This does not bode well for the local real estate market post-coronavirus.

Annual house prices, as measured by the House Price Index, rose by 4.2% in the euro area (EA19) and were up 4.7% in the EU27.

Compared with Q3, 2019, house prices rose by 0.7% in the euro area, 0.8% in the EU27 and decreased by -3.7% in Cyprus.

The highest annual increases in house prices in Q4, 2019 were recorded in Luxembourg (+11.0%), Slovakia (+10.9%) and Croatia (10.0%) while prices only fell in Cyprus (-4.8%).

Compared with the previous quarter, the highest increases were recorded in Malta (+3.5%), Estonia and Croatia (+2.9% each) and Poland (+2.8%), while the strongest decreases were observed in Cyprus (-3.7%), Denmark (-3.2%) and Hungary (-1.5%).

Eurostat says that house prices and rents in the EU27 have followed very different paths since 2007.

While rents increased steadily throughout the period up to the fourth quarter of 2019, house prices have fluctuated significantly.

After an initial sharp decline following the financial crisis, house prices remained more or less stable between 2009 and 2014.

There was a rapid rise in early 2015, since when house prices have increased at a much faster pace than rents.

Over the period 2007 until Q4, 2019, rents increased by 20.3% and house prices by 18.7%.

When comparing Q4, 2019 with 2007, house prices increased in 21 EU Member States and decreased in 6, with the highest rises in Austria (+88.4%), Luxembourg (+84.8%) and Sweden (+80.6%) and the largest decreases in Greece (-35.6%), Romania (-26.0%) and Ireland (-16.9%).

For rents, the pattern was different.

When comparing Q4, 2019 with 2007, prices increased in 26 EU States and decreased in one, with the highest rises in Lithuania (+101.2%), Czechia (+79.3%) and Hungary (+70.8%) and the only decrease in Greece (-17.5%).

In Cyprus house prices lost close to 17% and rents remained marginally stable.