House prices marginally up in 2Q

Financial Mirror (Cyprus) - - FRONT PAGE -

Res­i­den­tial prices for both houses and flats in­creased by 0.3% and 0.2%, re­spec­tively, in the sec­ond quar­ter with the big­gest in­crease be­ing in Lar­naca (1.1% for flats) and Paphos (1.1% for houses), ac­cord­ing to the 26 th RICS Cyprus Prop­erty Price In­dex.

Values for hol­i­day homes in­creased by 2.7% (flats) and 1.1% (houses). The hol­i­day home In­dex is pub­lished for the first time.

Com­pared to Q2 2015, prices in­creased by 0.5% for flats, 1.1% for houses, 2.8% for of­fices, while ware­houses were sta­ble. A de­crease of 0.8% for re­tail was noted.

Dur­ing the sec­ond quar­ter of 2016 the econ­omy showed some signs of sta­bil­ity, with the per­for­mance be­ing bet­ter than ex­pected and tourism mildly out­per­form­ing fore­casts. Un­em­ploy­ment re­mained at rel­a­tively high lev­els, on a down­trend to about 12% (from the high lev­els of 17%).

Given pre­vail­ing eco­nomic con­di­tions and the tur­bu­lence in Cyprus’ bank­ing sys­tem, there were rel­a­tively few prop­erty transactions dur­ing the quar­ter although vol­ume was higher on a year on year ba­sis. Lo­cal buy­ers in par­tic­u­lar were the most dis­cern­ing as un­em­ploy­ment and high debt for lo­cals main­tained lack of in­ter­est. Fur­ther­more, those in­ter­ested are try­ing to ac­cess bank-fi­nance.

The Prop­erty Price In­dex has recorded in­creases in al­most all cities and as­set classes, with sig­nif­i­cant in­creases be­ing recorded in Lar­naca area, whilst other towns are pro­gres­sively bot­tom­ing out.

Across Cyprus, on a quar­terly ba­sis rental values in­creased by 0.4% for apart­ments, 0.5% for houses, 1.5% for re­tail, 0.6% for of­fice while ware­houses rents de­creased by 0.4%.

Com­pared to Q2 2015, rents in­creased by 4.9% for flats, 4.9% for houses, 0.5% for re­tail and 5.2% for of­fices. Ware­houses dropped by 1.2%.

The ma­jor­ity of as­set classes and ge­ogra­phies are bot­tom­ing out, the RICS sur­vey said, with ar­eas that had dropped the most early on in the prop­erty cy­cle, e.g Paphos, Fa­m­a­gusta and Lar­naca, are show­ing some signs of price sta­bil­ity.

Sec­ond quar­ter av­er­age gross yields stood at 4% for apart­ments, 2.0% for houses, 5.3% for re­tail, 4.3% for ware­houses, and 4.5% for of­fices. The par­al­lel re­duc­tion and/ or sta­bil­i­sa­tion 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.

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