COVID19: Cyprus house prices rise despite pandemic

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House prices continued their upward trend in the second quarter, recording a quarterly increase of 0.9% from an 0.4% rise in the first three months, despite the growing market uncertainty induced by the pandemic.

This is tracked in the Central Bank of Cyprus (CBC) Residential Property Price Index (RPPI).

House prices increased by 1% while remaining stable in the previous quarter and apartment prices increased by 0.8% slower than the 1.4% rise in the previous quarter.

On an annual basis, both house and apartment prices increased during Q2 by 1.5% and 4.3% respectively, compared to 0.8% and 4.6% respectively in the previous quarter.

A slowdown in the growth of the Apartment Price Index is attributed to lower demand from foreign investors due to the stricter criteria in the Cyprus Investment Programme which was later scrapped.

Another major factor is the Covid-19 pandemic that enhances uncertainty in the property market.

Apartment prices on a quarterly basis recorded an increase in Limassol, Nicosia and Larnaca by 2.1%, 0.9% and 0.4% respectively while Paphos and Famagusta saw reductions of 1.7% and 0.6% respectively.

On an annual basis, there was an increase in all districts with the exception of Famagusta which had a 0.1% decrease.

Limassol had the biggest annual increase of 8.2%, followed by Larnaca 3.4%, Nicosia 2.6% and Paphos 2.4%.

The annual increases in house prices are mainly recorded in Nicosia district.

CBC attributed this fact to Cypriots have returned to the real estate market as a good investment and are gradually buying a house again for this purpose.

It is also pointed out that real estate as an investment currently offers higher returns compared to other forms of investments or bank deposits.

During Q2 2020, RPPI increased on a quarterly basis in almost all districts except for Famagusta, where it remained stable.

A quarterly increase in house prices was recorded in Limassol of 1.3%, in Nicosia, they improved 1.1%, in Paphos by 0.7% and in Larnaca by 0.1%.

On a yearly basis, there was an increase in all districts in house prices, Larnaca saw the biggest upswing at 2.6%, then Limassol with 2.4%, in Nicosia it was up 2%, in Famagusta 1.7% and in Paphos price growth of 1.5%.