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Deloitte: Sales volume down, sales of middle-class homes and condos up

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By Dimitris Tsiakki*

Deloitte: Μειoθηκε ο oγκο σωναγοωληιναυηκαν ;ιλειτινδιμε ισωναπεθνιστε ;σαΙα τΑξη /></p>
<p><strong>The Domain</strong> of real estate is an important indicator for the economy of Cyprus, as in recent years it has been one of the main growth drivers for the country. In particular, with the exception of 2020 and 2021 due to the pandemic, the real estate market has seen continuous increases, both in the volume of transactions and in prices per square meter. This contributed significantly to the growth of the country's wealth and domestic product.</p>
<p><strong>The importance of the residential sector</strong></p>
<p><strong>Analyst</strong>in the databases of the Department of Cadastre and Surveying, there is a noticeable decrease in both the volume and the total value of transactions during the first quarter of 2024, compared to the corresponding period of 2023. Focusing specifically on the residential real estate market, a a noticeable decrease in both the volume and the total value of transactions of 21.4% and 28.6% respectively. The total value of transactions made in 2024 amounted to €660 million, while the corresponding amount for 2023 was €930 million. These data show that not only did the volume of sales decrease, but the average price of each transaction also decreased.</p>
<p><strong>Despite this trend</strong>, the residential sector remains the largest, accounting for approximately 50% of total transactions in the first quarter of 2024, and 61% of total purchase value.</p>
<p>Analyzing the factors that led to this year's market contraction, it appears that the main reasons are the drop in sales of luxury apartments and houses in the provinces of Limassol and Paphos. Apartments continue to be by far the most popular property type, accounting for over 70% of total transactions. Aside from the absolute decline in volumes, the main difference between 2024 and 2023 is that home and condo sales aimed at mostly middle-income buyers increased from 89% in 2023 to 94% in 2024.</p>
<p> < p><strong>The limited</strong>mobility in the market for luxury apartments and houses is expected to remain at the same levels for the rest of 2024, as geopolitical developments in the surrounding areas, high interest rates, increased construction costs and reduced foreign capital investment in Limassol and Paphos, are not expected to recover before the end of the year.</p>
<p><strong>The dynamics by province</strong></p>
<p><strong>The provinces</strong> of Nicosia and Larnaca, which traditionally did not rely on buying and selling of luxury apartments and houses, kept their purchase sizes stable in terms of volume and value. Nicosia even recorded a small increase in the average sale price, mainly due to a higher average price for properties under €250 thousand.</p>
<p><strong>On the contrary </strong>in the provinces of Limassol and Paphos, where the volume of sales of apartments and houses worth more than €600 thousand, decreased by approximately 45% compared to the first quarter of 2023. It is noteworthy that in addition to the decrease in sales of houses over €1 million, a significant decrease was also recorded in the average price of these transactions.</p>
<p><strong>Regarding</strong>the areas where most residential real estate transactions take place, in the Nicosia province are dominated by the Municipalities of Nicosia, Strovolos and Lakatamia, which remained stable compared to 2023. A decrease was noted in the Municipalities of Latsia and Aglantzia.</p>
<p><strong> In Limassol, there was a decrease in almost all areas in both the volume and the average value of transactions, with the exception of Ypsonas and the Cherkezoi area, where almost twice as many transactions were recorded compared to 2023. All transactions in these two areas concerned properties worth less than €500 thousand.</p>
<p><strong>In Larnaca</strong>, there was a decrease in the total volume of transactions in the Municipality of Larnaca, but the average price remained stable. In the Municipality of Aradippou, the largest increase was recorded of all the regions of the province of Larnaca, both in volume and in average price. Aradippou's development is mainly focused on houses and apartments aimed at middle-income buyers.</p>
<p><strong>Breaking down</strong>the prices per square meter, we observe that apartments aimed at the middle income classes range between €2,000 and €2,400 per square meter in Nicosia province, and between €3,200 and €7,000 for luxury apartments. The corresponding prices in the Limassol district range at higher levels, between €2,500 and €4,000 for apartments aimed at the middle income classes, and between €5,000 and €11,000 for luxury apartments, which mainly concern beachfront properties.</p>
<p> < p><strong>Summing up</strong>, while there is a contraction of the real estate market in the first quarter of 2024 compared to the corresponding period of 2023, the market continues to be maintained at high levels compared to the last seven years. The high cost of borrowing and the reduced investment of foreign capital in the sector, due to the developments in the surrounding areas, seems to affect the purchasing profile, with a decrease in the sales of luxury houses and apartments in Limassol and Paphos, while at the same time the sales of apartments in cities with more affordable prices, such as Nicosia and Larnaca.</p>
<p><em>*Mr. Dimitris Tsiakkis is an Operations Director in the Financial Services department of Deloitte.</em></p>
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Source: www.kathimerini.com.cy

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