Apartment prices are rising and house prices are falling due to the preference of domestic buyers and investors. The data of the Central for the house price index are revealing for the trend that prevails in the real estate market and how the trends are formed. Households seem to have a preference for buying an apartment as their first home due to the new data that are emerging in the market and specifically due to the subsidy of the interest rate for mortgages by the state and the increase observed in rental prices.
“It seems that the interest of the domestic market both for investment purposes and for acquiring a first home leads to a significant increase in the real estate market, especially in terms of apartments and small houses. According to unofficial estimates by real estate market experts, the majority of transactions in the real estate market concern apartments and small new homes by buyers who want to use the state interest rate subsidy for mortgages, but also the low interest rates on mortgages granted by mortgages. banks “.
The Central notes “the increase in the cost of construction materials continues to contribute to the increase of the price level, since it is now felt in all sectors of the construction activity”. In the bulletin, the Central Bank states that “the fact that the wave of price increases in basic building materials increases property prices regardless of demand, makes the constant monitoring of the market necessary to see if demand will be affected. Any impact on demand will adjust the growth trend observed in the sector to date, despite the various other problems faced in the market, such as epidemiological developments and pressures from the existing effort to sell real estate from the portfolios of banks and credit companies to the market”.
It is also noted that “according to unofficial estimates by real estate market experts, the demand for real estate by foreign investors is also stabilizing, which in fact concerns lower value real estate compared to previous years, which is related to the cessation of KEP”.
In relation to the cost, “house prices decreased on an annual basis by 0.3%, while on a quarterly basis they recorded a small increase of 0.3% which is mainly due to increases that occurred in the provinces of Larnaca and Paphos. On the contrary, the prices of the apartments increased by 1% on a quarterly basis and by 4.5% on an annual basis “. The Central reports that the increase that continues in the third quarter and is observed in apartment prices confirms once again, among other things, the continuing preference of domestic buyers and investors for apartments, in relation to homes in most provinces of Cyprus.
Regarding the annual changes in the house price indices per province, an increase was recorded in Limassol, Larnaca and Paphos while in the other areas decreases were recorded. Specifically, in Limassol house prices increased by 2.9%, in Larnaca by 2.9% and in Paphos by 1%. On the contrary, in Nicosia prices continue their downward trend, showing a decrease of 1.2% on an annual basis, and in Famagusta 0.7%.