Property prices start to stabilise in Q2
Property prices seem to be stabilising, according to Central Bank of Cyprus data, despite a continued decrease in the value of the relevant index for the 22nd successive quarter. However, in all areas, the annual declines in the second quarter were smaller than those of the previous quarter.
The property price index fell at a decelerated pace of 0.4% in the second quarter of 2015 compared to a 1% decrease in the first quarter.
House and apartment prices fell by 0.4% and 0.6%, respectively.
On an annual basis,
prices declined by 5% in the second quarter of the year, registering a decelerating annual decline rate for the fifth consecutive quarter.
“The economy as a whole is showing signs of recovery as GDP in 2015 is registering a positive growth, while demand for real estate continues to show annual increases. These developments are expected to aid in stabilising property prices,” the central bank said in its quarterly report.
The general house price index recorded the biggest quarterly decline in Paphos (1.3%), so far the main driver of property sales, thanks mainly to holiday home buyers and investors taking advantage of the residency scheme for purchases of at least EUR 300,000. Quarterly decreases were also observed in Nicosia (0.6%), Limassol (0.2%) and Larnaca (1%).
Famagusta was the exception as a marginal increase of 0.1% was registered for the second successive quarter.
The largest annual decrease in the general house prices index was recorded in Larnaca (6.3%) and the smallest in Famagusta (1.7%).
The decrease in Nicosia was 5.7%, Limassol 4.3% and in Paphos 3.8%.
Despite the declines, prices are still 6.7% higher than in the first quarter of 2006. Prices have declined by 30.3% since 2008 when they reached their highest level since the central bank started publishing the data.
Observers suggest that the recently voted foreclosures legislation is expected to help the overall financial situation with the banks and the housing market, as the new set of laws encourage people who can actually afford to pay back their loans to start doing so, while banks are now more willing to restructure loans and provide facilities to high net worth individuals.