The gradual increase in the sale and rental prices of the apartments is a serious problem, to which the state has not taken the appropriate measures, says the director of Imperio and vice president of the Association of Land Development Entrepreneurs, Giannis Misirlis.
In an interview with Phileleftheros, Mr. Misirlis states that in order for prices to be regulated from the market, at least four to five years will pass, a period during which there will be no changes in the amount of prices. That is why it is necessary, he emphasizes, in the meantime to give the appropriate incentives, so as to reverse the existing reduced supply. In this way, Mr. Misirlis underlines, the increased demand will be covered, with the consequent reduction of the prices of the apartments.
In recent months, Mr. Misirlis, there has been a gradual increase in apartment prices, based on official statistics. Why are apartment prices rising compared to single-family homes?
Rising apartment prices are a major problem, especially for young couples who are unable to own a home, given the wider economic environment. In order to find solutions, we need to look at the problem in depth, focusing on the real reasons why the prices of these properties are growing rapidly. The recent report of the Central Bank (CB) on the house price index, as well as press releases partially analyze the problem, recognizing only some of the factors that contribute to its alleviation, such as that we should pay attention to the growth rate of house prices. construction materials. However, perhaps the most important factor that contributes to the increase in prices is not recognized, namely the reduced supply of suitable real estate. It is a fact that, for years, the supply of apartments has been lower than the demand, a situation that is not expected to improve in the near future, given the current market conditions. On the contrary, with mathematical precision, the supply will decrease even more in the next three to four years, as the implementation of many new projects was extended for later.
How can the problem of low supply be solved?
In the long run, the market tends to correct itself. This, of course, presupposes the existence of favorable conditions, so that a long time does not pass until this correction is made. And this is where limited state intervention is required in order to correct any distortions. Take Limassol for example. A closer look at the Limassol market reveals that rents have risen sharply in recent years. And since CB compares the growth rates of prices with the average growth rate of the Cypriot economy, then let me say that rents have increased much more than the average growth rate of the Cypriot economy in the last five years. The market will correct this distortion in the long run. However, given the small size of the local market, it may take another four to five years to reach the desired price levels. Until then, tenants will continue to be victimized, paying high rents. That is why the intervention of the state is required, until the rents are regulated by the market.
What initiatives should be taken by the state in this direction?
It is crucial that the private and public sectors work together to create the right conditions, so that the real estate market is consolidated and there is enough real estate available at affordable prices, but also appropriate financing conditions, so that home ownership is not the prerogative of Such incentives should be provided by the state, which will encourage and allow the private sector to produce more real estate in high demand, such as apartments. Increasing the supply will also solve the problem of high rents.
At the same time, with regard to the rental market, such conditions should be created that favor the existence of institutional real estate investors, something that is absent from the Cypriot rental market, compared to similar foreign markets. Creating the right conditions for institutional investors to invest in a large number of apartments with the obligation to sell them later in the rental market, will solve the problem of high rents. Undoubtedly, the higher supply will hold back the upward trend of prices, while it can also drop them.
Support new buyers
Mr. Misirlis also stressed that Cyprus is ranked quite low in the list of European countries with the percentages of home ownership. He noted that the right buyers should be supported with the right moves, such as the creation of the required offer, which will bring affordable prices in houses and apartments, so that acquiring a home does not remain a dream for them. “For these reasons”, added Mr. Misirlis, “as the Association of Land Development Entrepreneurs we have already expressed our dissatisfaction with the proposed bill to increase VAT. in homes between 140 – 200 m². Unfortunately, with this bill, young families who buy a house of 210 m², are required to pay 14% more. “Real Estate is one of the highest taxed sectors of the economy and certainly, the current situation we are in, where the increase in the prices of construction materials and the limited supply are predominant, is not suitable for the introduction of any new taxation”.