Property prices slowed in 2019 as foreign demand dipped

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Cyprus’ Residential Property Price Index (RPPI) slowed in 2019, affected by reduced demand from foreign investors due to stricter criteria in the passports for investment scheme, the Central Bank (CBC) said.

The RPPI in Q4, 2019 recorded a slower upward trajectory, marking a quarterly rise of 0.3% compared with an increase of 0.7% the previous quarter, with the slowdown affecting both house and apartment prices.

The slowdown is more pronounced for apartment prices which in Q4, 2019 increased by 0.5% compared to a rise of 1.5% in Q3.

The index for house prices in the last quarter of 2019 remained essentially unchanged with a marginal increase of 0.2% compared with 0.3% in the previous quarter.

According to the CBC data, the largest quarterly reductions were in prices of apartments and houses in the district of Paphos with a fall of 3.0% and 0.9% respectively.

Prices in the districts of Larnaca and Famagusta also fell following increases in the previous quarters.

On an annual basis, the RPPI increased by 2.2% in Q4, 2019, albeit at a slower pace than the two previous quarters which had increases of around 2.8%.

Annually, apartment prices rose by 4.1% and house prices were up 1.5%.

The largest annual increase for house prices was recorded in Famagusta with a 3.3% climb, for apartments, Limassol and Larnaca had the biggest spikes of 7.6% and 7.4% respectively, the CBC said.

“The slowdown in the RPPI is associated with the decline in demand from foreign investors due to stricter criteria for the Citizenship Investment Scheme.”

“Cypriot buyers gave significant backing to the real estate market in 2019 which should  not be expected in 2020 due to the impact of the coronavirus pandemic.”

CBC said reduced domestic and foreign demand for housing in 2020 “shows the uncertain course in the real estate sector due to the expected impact of the lockdown measures aiming to contain the spread of the coronavirus pandemic”.