The sluggishness of the Housing Price Index of the Central Bank of Cyprus continues with a marginal quarterly decrease for the first time after many quarters.
According to today's newsletter, the index in the third quarter of 2020 recorded the first small quarterly decrease after sixteen quarters of continuous increases. Specifically, it recorded a quarterly decrease of 0.3% compared to an increase of 0.9% in the second quarter of 2020, while on an annual basis it recorded a slowing increase of 1.2% compared to 2.2% in the previous quarter.
For the first time since the first quarter of 2016, quarterly reductions in housing prices are recorded in four provinces simultaneously. Specifically in Paphos a decrease of 1.8% was recorded, in Nicosia 0.5%, and in Larnaca and Famagusta 0.4%.
In terms of prices per type of house, apartment prices recorded a small decrease of 0.2% on a quarterly basis for the first time since the third quarter of 2016, mainly due to the effects of the pandemic and the decrease in demand from foreign buyers.
House prices also decreased by 0.5% compared to the previous quarter. On an annual basis, both house and apartment prices recorded a slowdown of 0.7% and 2.5%, respectively.
According to the Central Bank, inevitably, the effects of the pandemic and the contraction of economic activity have an impact on the wider real estate market and construction activity, with a passing on of these effects to real estate prices. At the same time, however, support for real estate demand from domestic buyers appears to be provided by low interest rates and the government's plan to partially subsidize interest rates on mortgages.