Residential property prices index rises for 10 consecutive quarters

Residential property prices rose an average 0.2% in Q4 2018 continuing a positive course for a tenth consecutive quarter, with signs that the upward trajectory will continue this year, the Central Bank of Cyprus said.

According to the Residential Property Price Index (RPPI), compiled by the CBC, Nicosia, Limassol and Paphos registered a quarterly rise while Larnaca and Famagusta recorded marginal decreases.

The indices for apartments and houses marked a quarterly rise of 0.4% and 0.1%, respectively.

On an annual basis, the RPPI rose by 1.5% in the fourth quarter with all districts marking gains.

Famagusta registered the largest annual increase in house prices with 2.5%, while Paphos showed reduction for three consecutive quarters.

Apartment prices on an annual basis in Q4 2018 increased for the third consecutive quarter in all districts with Limassol and Famagusta posting the largest increase with 7.5% and 7.3%, respectively.

“Increased demand for houses and apartments continue to push prices upward, while increased supply of real estate property from debt-to-asset swaps has contained certain property prices,” the CBC said.

“In spite of significant GDP recovery in Cyprus and increase in demand, property prices mark limited increase with the exemption of Limassol where prices are pushed upward for external factors which include the construction of the marina, the casino and the demand in properties for the purpose of acquiring citizenship.”

Property prices are restricted by the increase in supply due to real estate sales by credit acquiring companies or banks and property owners in the context of mortgage NPL restructuring or settlements.

CBC added that construction activity marked an annual increase of 14.2% in Q4 2018, noting however that despite annual increases in the construction production index, the index level remains lower than the historic high levels before the 2013 financial crisis.

Demand for housing loans in Q4 continued its upward trend, while new loans for house purchases in Q1 2019 amounted to EUR 219 mln, slightly higher than the respective quarter of 2018.

On the future course of property prices, the CBC said various signs show that the upward trajectory will continue in the coming quarters.