Prop­erty price fall slows down in 3Q

Financial Mirror (Cyprus) - - FRONT PAGE -

Dur­ing the third quar­ter of he year, the econ­omy showed some signs of sta­bil­ity, with the per­for­mance be­ing bet­ter than ex­pected and tourism mildly out­per­form­ing fore­casts, ef­fec­tively help­ing to slow down a fall in prop­erty prices.

Given pre­vail­ing eco­nomic con­di­tions and a con­tin­ued tur­bu­lence in the bank­ing sys­tem, there were few trans­ac­tions dur­ing the quar­ter al­though vol­ume was higher on a year-on-year ba­sis, ac­cord­ing to the lat­est sur­vey by RICS Cy[prus.

Lo­cal buy­ers in par­tic­u­lar were the most dis­cern­ing as un­em­ploy­ment is at high lev­els and the prospects of the econ­omy main­tained the lack of in­ter­est. Fur­ther­more, those in­ter­ested are try­ing to ac­cess bank­fi­nance.

The RICS Prop­erty Price In­dex recorded falls in most towns and as­set classes while the rate of de­crease is slower than pre­vi­ous quar­ters. In ad­di­tion, cer­tain dis­tricts have shown signs of sta­bil­ity as Paphos, Lar­naca and Fa­m­a­gusta are pro­gres­sively bot­tom­ing out.

Across Cyprus, move­ments in prop­erty prices ap­pear mixed as res­i­den­tial prices for flats fell by 0.4% and 0.5% for houses. The big­gest drop was in Fa­m­a­gusta (-1.2% for flats) and in Li­mas­sol -3.2% for houses. A de­crease of 0.3% for houses was noted in Ni­cosia.

Val­ues of re­tail prop­er­ties fell by an aver­age 0.6%, of­fices were sta­ble at the same level, and ware­houses in­creased by 1.1%.

Com­pared to Q3 2014, prices dropped by -1.9% for flats, -1.3% for houses, -4% for re­tail, -2.7% for of­fices and -1.8% for ware­houses. On a quar­terly ba­sis, rental val­ues in­creased by 0.3% for apart­ments, +1.5% for houses and +2.6% for of­fices. A de­crease of -1.1% for re­tail units was noted and -0.1% for ware­houses. Com­pared to Q3 2014, rents dropped by -1.5% for flats, -0.5% for houses, -4% for re­tail, -2.5% for ware­houses and -0.2% for of­fices.

The ma­jor­ity of as­set classes and re­gions con­tinue to be af­fected, with ar­eas that had dropped the most early on in the prop­erty cy­cle now near­ing or at the trough. Paphos and Fa­m­a­gusta are show­ing some signs of price sta­bil­ity. Paphos is the only dis­trict with pos­i­tive re­turns in all as­set classes when com­pared to Q3 2014.

At the end of Q3 2015 aver­age gross yields stood at 3.9% for apart­ments, 2% for houses, 5.2% for re­tail, 4.3% for ware­houses and 4.5% 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 repric­ing of cap­i­tal val­ues to take place, es­pe­cially for prop­er­ties in sec­ondary lo­ca­tions, said the RICS Cyprus re­port.

“The econ­omy, that was an up­grade by Fitch, is grad­u­ally re­cov­er­ing, de­spite the non-per­form­ing loans and un­em­ploy­ment re­main­ing prob­lems that re­quire time and se­ri­ous ef­fort,” said RICS Cyprus board mem­ber Jen­nifer Petri­dou Sharpe.

“De­spite the smaller num­ber of trans­ac­tions in the third quar­ter, trade vol­ume was up on an an­nual ba­sis as the fall in prices has cre­ated new in­ter­est in the mar­ket,” she added.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.