Residential property price index loses steam due to declining foreign demand
Cyprus Residential Property Price Index (RPPI) continued its upward trend albeit with a declining pace, affected by the reduced demand from foreign investors due to stricter provisions introduced to the Cyprus Investment Programme (CIP), the Central Bank of Cyprus (CBC) said.
Moreover, the CBC says that the reduced both domestic and foreign demand for housing in the first quarter of 2020 “shows the uncertain course in the real estate sector due to the expected impact of the lockdown measures aiming to contain the spread of the coronavirus pandemic.”
According to the CBC the RPPI in the last quarter of 2019 continued its upward trajectory, marking a quarterly increase of 0.3% compared with an increase of 0.7% the previous quarter, with the slowdown affecting both houses and apartments.
The slowdown is more pronounced in the apartments index which in the last quarter of 2019 increased by 0.5% over the previous quarter, compared with an increase of 1.5% in the third quarter. The index for house prices in the last quarter of 2019 remained essentially unchanged marking an quarterly increase of 0.2% compared with 0.3% in the previous quarter.
According to the CBC data, the largest quarterly reductions were marked in the prices of apartments and houses in the district of Pafos with 3.0% and 0.9% respectively, while prices in the districts of Larnaca and Famagusta marked quarterly reductions following the increase in the last quarters.
On annual basis the RPPI increased by 2.2% in the last quarter of 2019, albeit in slower pace compared with the two previous quarters which marked an increase of 2.8%. Apartment prices rose by 4.1% and house price rose by 1.5%. The largest annual increase was recorded in Famagusta with 3.3% and for apartments in Limassol and Larnaca with 7.6% and 7.4% respectively, the CBC said.
“The slowdown in the RPPI is associated with the decline in demand from foreign investors due to stricter criteria to the CIP,” the CBC said, adding that Cypriot buyers gave significant backing to the real estate market in 2019 which will is expected to continue due to the impact of the coronavirus pandemic.”