The number of real estate transactions as well as price indices shows that the real estate sector in Cyprus has shifted into a stability mode.
The number of sales documents submitted during the first six months of 2016 shows a 28% increase compared to the same period in 2015. If the trend continues throughout 2016 we should expect a total of sales of around 6,400.
A normal year for the real estate sector should register around 10,000-12,000 sales. So, if the 2016 projection holds true, sales should be around 53%-64% of the normal. It is preferable that we experience a gradual sales increase so that the market can service it, avoiding the ‘bubbles’ of the past.
The gradual increase of sales is supported by the marginally improved financial standing of Cypriot households. The Cypriot family became heavily indebted during the 2000-2008 period, which contributed to the creation of the real estate bubble of the time. The reduction of the level of loans is a procedure to be continued for a few more years. There are of course foreign buyers, about 25% of the total sales, who continue to show interest in Cyprus properties for a variety of reasons.
Prices have been steady for the past 9 months. According to the RICS index there was a price increase of 1.2% in apartment prices compared to the previous 3 months. Houses registered a 1.5% increase, while shops decreased by0.5%. Trends as reported by RICS are very similar to those of the Central Bank of Cyprus.
A new index, recently released by the Cyprus Statistical Service (CYSTAT), deals with houses and apartments and draws its data from the Lands&Surveys Department, based on prices of transactions. While monitoring the index on a long-term basis we avoid studying it on a 3-month basis as it registers considerable deviations between 3-month terms. The index showed a 1.2% annual drop between the first 3 months of 2015 and the first 3 months of 2016, also indicating a stabilisation trend.
Property foreclosures have been launched, but have not been very successful, as we had predicted. They do not seem to be affecting property prices a whole lot.
Based on these facts we think we can express guarded optimism for price trends as well as the volume of transactions. We are led to believe that they will move on a course related to the improving of bank finances and the Cypriot economy.
Written By: George Mouskides
Director FOX Smart Estate Agency
Chairman Cyprus Association of Property Owners (ΚΣΙΑ)
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