Home prices up in Q2, biggest rise in Limassol

Residential prices for both houses and flats increased on a quarterly basis by 1.6% and 1.5%, respectively, in the second quarter of 2017 with the biggest increase being in Limassol with quarterly increase of 3.8% for flats and houses, according to the 31 st edition of the RICS’ Cyprus Property Price Index.

For Larnaca on a quarterly basis, across all asset classes, prices remained stable.

Values for holiday homes on a quarterly basis across Cyprus increased by 2.6% for flats and 1.9% for houses. Limassol showed the highest quarterly increases for holiday apartments with an increase of 4.2% and Paphos for holiday homes with an increase of 3%.

Across Cyprus, on an annual basis (compared to Q2 2016), flats increased by 6.2%, houses by 4.7%, offices by 1.6%, warehouses by 0.2% and retail by 2.0%.

During the second quarter of 2017, the economy showed further signs of stability, with a seasonally adjusted quarterly GDP growth of 0.9% and an annual seasonally adjusted GDP growth of 3.5%. Unemployment remained at relatively high levels, on a continued downwards trend to ca 10.8% (from the high levels of 17%).

Given prevailing economic conditions and the marginally improved confidence in the Cyprus’ banking system, there are relatively higher transactions during the quarter and improved market sentiment. Financial institutions, despite their nonperforming loans (NPLs), have been more willing to provide access to finance and there is an increasing interest from locals.

The Property Price Index has recorded increases on an annual basis in all towns and asset classes, with significant increases being recorded in Limassol, Nicosia and Larnaca, whilst Paphos and Paralimni have shown smaller annual increases, the RICS report said.

On a quarterly basis, rental values increased by 3.0% for apartments, 1.0% for houses, 2.0% for retail, 3.7% for offices and 0.7% for warehouses.

Compared to Q2 2016, rents increased by 8.3% for flats, 10.2% for houses, 6.8% for retail, 14.4% for offices and for warehouses 4.2%. All asset classes have shown a consecutive quarterly growth.

At Q2 2017, average gross yields stood at 4.1% for apartments, 2.1% for houses, 5.4% for retail, 4.3% for warehouses, and 4.9% 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 repricing of capital values to take place, especially for properties in secondary locations,” the RICS report concluded.