Prop­erty price drop slows in Q4

Financial Mirror (Cyprus) - - FRONT PAGE -

Prop­erty prices con­tin­ued to fall in the last quar­ter of 2014, at a some­what slower pace than in the third quar­ter, ac­cord­ing to data pro­vided in the RICS Cyprus Prop­erty Price In­dex.

The 21st quar­terly price and rental in­dex, de­vel­oped in co­op­er­a­tion with the Uni­ver­sity of Read­ing, found that av­er­age mar­ket prices fell by 5.4% for flats, 5% for houses, 8.1% for re­tail, 6.1% for of­fices and 5.3% for ware­houses, com­pared to the fourth quar­ter of 2013.

In the pre­vi­ous quar­ter, the RICS Cyprus sur­vey had seen av­er­age prices drop by 6.3% for flats, 4.4% for houses, 9.6% for re­tail, 6.3% for of­fice, and 4.2% for ware­houses.

Jus­ti­fy­ing the slow­down in the price fall, the sur­vey recog­nised that in the fourth quar­ter of 2014 the econ­omy had shown some signs of sta­bil­ity, with a bet­ter-thanex­pected per­for­mance and tourism mildly out­per­form­ing fore­casts. But un­em­ploy­ment re­mained at a his­tor­i­cal high level, and had sta­bilised at 16-17%.

“Given the pre­vail­ing eco­nomic con­di­tions and the tur­bu­lence in the bank­ing sys­tem, there were few trans­ac­tions in the quar­ter although vol­ume was higher on a year-on-year ba­sis. Lo­cal buy­ers in par­tic­u­lar were the most dis­cern­ing as the in­crease in un­em­ploy­ment and the prospects of the lo­cal econ­omy main­tained the lack of in­ter­est. Fur­ther­more, those in­ter­ested were un­able to ac­cess bank-fi­nance.”

The RICS Cyprus Prop­erty Price In­dex recorded falls in al­most all towns and as­set classes, with sig­nif­i­cant drops in Ni­cosia which “is clearly feel­ing the im­pact on the gov­ern­ment and bank­ing sec­tor that tra­di­tion­ally dom­i­nate the em­ploy­ment mar­ket, whilst other towns are pro­gres­sively bot­tom­ing out.”

Across Cyprus, res­i­den­tial prices for both houses and flats fell by 1.1% and 0.7%, re­spec­tively, with the big­gest drop be­ing in Fa­m­a­gusta (3.6% for houses) and Ni­cosia (1.1% for flats). Val­ues of re­tail prop­er­ties fell by an av­er­age 1.6%, of­fices by 1.2%, and ware­houses by 1.9%.

Com­pared to Q4 2013, prices dropped by 5.4% for flats, 5.0% for houses, 8.1% for re­tail, 6.1% for of­fice, and 5.3% for ware­houses.

On a quar­terly ba­sis rental val­ues de­creased by 1.3% for apart­ments, 0.2% for houses, 0.4% for re­tail units and 0.9% for ware­houses; of­fice rents in­creased marginally by 0.2%.

Com­pared to Q4 2013, rents dropped by 5.0% for flats, 3.1% for houses, 8.9% for re­tail, 8.8% for ware­houses, and 2.9% for of­fices.

“The ma­jor­ity of as­set classes and ge­ogra­phies con­tinue to be af­fected, with ar­eas that had dropped the most early on in the prop­erty cy­cle now near­ing or at the trough, e.g Paphos and Lar­naca are show­ing some signs of price sta­bil­ity,” the RICS re­port said.

At the end of Q4 2014, av­er­age gross yields stood at 3.8% for apart­ments, 2.0% for houses, 5.3% for re­tail, 4.3% for ware­houses, and 4.4% for of­fices.

“The par­al­lel re­duc­tion in cap­i­tal val­ues and rents is keep­ing in­vest­ment yields rel­a­tively sta­ble and at low lev­els (com­pared to yields over­seas). This sug­gests that there is still room for some re-pric­ing of cap­i­tal val­ues to take place, es­pe­cially for prop­er­ties in sec­ondary lo­ca­tions,” the study said.

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