House prices stable, property rentals drop

1 min read

Cyprus real estate prices & rentals recorded quarter-on-quarter drops across most property categories, but house values remained stable, according to consultancy firm WiRE FS.

Paphos had some of the biggest quarter-on-quarter drops in prices (2.6% for retail units, 1.7% for warehouses, 1.5% for offices, 3.2% for holiday apartments and 2.5% for holiday homes).

Limassol had the biggest drop in office rents (11.1%).

According to the first Wire FS Q1 2021 market overview, Nicosia was the only district with a price increase in some sectors (1.2% for houses, 1.3% for retail and 2.3% for offices).

Prices of holiday houses and apartments fell by 1% and 0.2% respectively.

The biggest drops were in Limassol (1.8% for apartments) and Paphos (3.2% for holiday apartments and 2.5% for holiday houses).

Residential prices for apartments remained broadly the same compared to Q4 2020 and increased by 0.4% for houses.

Prices of retail properties and warehouses fell by 0.7% and 0.8% respectively, whilst those of offices increased by 0.3%.

Compared to Q1 2020, prices of retail units fell by 5.3%, warehouses by 4.5%, office space by 1.0%, holiday apartments by 1.2% and holiday homes by 3.2%.

Over the same period, house prices increased by 1.5%.

Quarter-on-quarter rental prices decreased by 0.1% for apartments, 1.4% for houses, 1.8% for retail units, 2,6% for offices, 0.4% for holiday apartments and 2.9% for holiday houses, while rental values for warehouses increased 0.4%.

Compared to Q1 2020, rents dropped by 0.6% for apartments, 6.4% for retail properties, 3.2% for offices, and 5.4% for holiday homes.

Rents of houses, warehouses and holiday apartments increased by 2.6%, 0.7% and 0.1%, respectively.

Transaction Volume year-on-year across Cyprus decreased by 21%.

Transactions in Nicosia increased by 8% and decreased in Limassol by 24%, in Larnaca by 22%, in Famagusta by 11%, and in Paphos by 40%.

Over the past year, April 2020 to March 2021, contracts of sale were deposited for 7,932 properties, of which 2,186 in Nicosia (28%), 2,491 in Limassol (31%), 1,240 in Larnaca (16%), 576 in Famagusta (7%) and 1,469 in Paphos(19%).

Household lending for mortgages totalled €9.4 bln in March, with 93.1% local residents, 0.4% to residents of the Eurozone, and 6.5% for other countries.

Compared to March 2020, housing loans to locals increased by €156.1 mln whilst those to residents of Eurozone countries and other states decreased by €13.1 mln and €244.8 mln, respectively.

Progressively, outstanding loans are increasingly concentrated on local residents, said the outlook.

Year-on-year building permits for residential properties showed a decrease of 9% in sqm and 15% in the number of dwellings.

“Activity and prices in the main commercial centres of Nicosia and Limassol are currently stable, as locals are acquiring residential properties, mostly apartments, taking advantage of various government subsidies and generating income,” said the Wire FS report.

“Businesses are upgrading their office requirements, resulting in an increase in demand for Grade A office space and a contraction across lower quality premises.

“The other districts continue to experience low levels of demand, as they are more reliant on overseas markets and have a higher dependency on tourism.

“With banks flushed with liquidity, having circa €19 bln of NPLs in the economy, and government debt exceeding 100% of GDP, there is a danger of the economy sliding into ‘Japanisation’, i.e. low growth and deflation (in real terms).”