New real estate index from the land registry

На Кипре хотят ввести новый индекс цен на недвижимость
29 September 2020 Liza Medvetskaya
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The response of the Department of Lands and Surveys for the creation of a new real estate index proposed by the Council of Economy and Competitiveness is positive.

The council's activities for 2019 states that the cadastre states that it is ready to proceed with the necessary actions, in cooperation with the other competent Services, to form the index proposed by the council.

To facilitate the systematic monitoring and analysis of developments and prospects of the real estate market, through the configuration and provision of appropriate databases by the competent authorities, the council submitted in October 2019 a proposal to the government to create a new Price Index. Real Estate Based on Real Transactions.

The council identifies some weaknesses in the existing methodologies used by the competent State Services for the development of relevant indicators in different contexts. Therefore, the council proposes through its further cooperation of all those responsible, namely the Central Bank of Cyprus. The Department of Lands and Surveys and the Statistical Service of Cyprus so that through the exchange of available information and the use of mutual know-how in this area, form a new Real Estate Price Index that will serve the above purpose. As suggested by the council, the possibility of cooperation and similar know-how by other organizations could also be explored.

"The real estate market is inextricably linked to macroeconomic developments and financial stability. "Systematic monitoring and analysis of real estate market developments and prospects are of great importance, especially for Cyprus, both for a complete assessment of the macroeconomic conditions and prospects of the Cypriot economy and for more effective supervision of the financial system," the council said.

 In this regard, a significant percentage of the loan portfolio of Cypriot banks is secured mainly by Cypriot real estate. The Central Bank of Cyprus (CBC) publishes a house price index based on domestic commercial banks' valuation data. According to the CBC methodology, if a property is sold without mediation through the banking system or the property the question is in mortgage on another loan. The property is not included in the sample of CBC.

Also, since the indices are based on estimates, they have a smoother fluctuation. Usually, they show a time lag in recording price changes (one or more quarters), especially at the turning points of the economic cycle, compared to indices based on real selling prices.

In contrast, indicators based on transaction data can record changes in property prices in real-time. In general, transaction data is more representative of information for constructing the real estate index, especially in times of economic recession and crisis.

На Кипре хотят ввести новый индекс цен на недвижимость

Simultaneously, the Statistical Service of Cyprus forms its Housing Price Index, which is based on transaction data. It is stated that although this index is based on the relevant methodology of Eurostat. The index faces technical problems, which are due, among other things, to the relatively small number of observations and available characteristics of the property required for the application of advanced computational methods such as utilitarian regressions. Also, this index of the statistical service presents large fluctuations (in terms of quarterly changes) and changes in the methodology of the index (break in the series).

Given the above, the Economic and Competitiveness Council considers further and necessary further cooperation between the Statistical Service of Cyprus and the Central Bank of Cyprus to create a complete index of real estate prices. This single index should include the data of transactions of the Cypriot real estate market, as collected by the Department of Lands and Surveys (SCC) of the Ministry of Interior, but also to utilize the relevant know-how of the two organizations taking into account both methodologies followed.

On this basis, the council proposes the formulation of the appropriate framework through which the ICT will systematically provide the data of the Cypriot real estate market transactions to the CBC, the Statistical Service and, if applicable,

Source: stockwatch.com.cy
Photos: pixabay.com
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