Paradoxical Crisis: What Will Happen to House Prices in Cyprus after the Coronavirus Pandemic?

Парадоксальный кризис: что будет с ценами на жилье Кипра после пандемии коронавируса?
18 January 2021 Liza Medvetskaya

Since March 2020, the Cyprus property market has been going through a paradoxical crisis.

Despite the collapse in sales, owners continue to resist the new reality and are in no hurry to reduce prices for houses and apartments.

However, the cost of housing in the Cypriot market in 2021 will largely depend on the depth of the impact of the Covid-19 crisis.

Most of all, undoubtedly, will lose the developers, whose main activity was the construction of elite new buildings under the Golden passports program.

The abrupt closure of the circuit created huge problems for many of them. In view of the cessation of funding for objects, some of the high-rise buildings are now unlikely to be completed, others will remain only on paper.

This combination of circumstances is likely to inevitably increase the demand and prices for housing in Cyprus, especially in the coastal regions of the country.

It is worth noting that despite the difficult period that the Cyprus property market is currently experiencing, housing prices on the island, with the exception of elite new buildings, are kept at a stable level.

By the way, this is due to the fact that apartments and houses in the middle price range are a hot commodity that people are unlikely to ever stop buying or renting.

For example, locals are now more willing to invest their money in inexpensive real estate, with the expectation that they will be able to rent it in the future and make a profit, rather than open deposits at zero interest in a bank.

On the other hand, it cannot be denied that there is an increase in problem loans in Cyprus, a relatively large supply of options in the housing market and a decrease in lending from banks, which undoubtedly has a negative impact on the real estate sector.

The development of the Cyprus real estate market will also largely depend on the development of the country's economy, tourism, consumer psychology, vaccinations, a sense of security and the focus on investment of the world community.

By the way, a temporary drop in prices is now observed in all major cities of the island, where interested buyers from Germany, Great Britain, the Persian Gulf countries, China and Russia in 2018 and 2019, as well as at the beginning of 2020, were actively buying real estate. For investors from non-EU countries, an additional incentive was the opportunity to obtain Cypriot citizenship by Investment Program.

Парадоксальный кризис: что будет с ценами на жилье Кипра после пандемии коронавируса?

In 2021, it is expected that in Limassol the average cost of 1 m2 will remain in the range from EUR 3 thousand to 5 thousand, while in 2020 prices were from EUR 3.5 thousand to 6 thousand per 1 m2, and in 2019 from EUR 4 thousand to 5.5 thousand.

In Paphos, it is expected that in 2021 property prices will be about EUR 2.5 thousand to 3.5 thousand per m2. In 2020, the cost of 1 m2 in the city was fixed at the level from EUR 2.8 thousand to 4 thousand, and in 2019 - from EUR 3.8 thousand to 4.2 thousand.

In Nicosia, real estate prices will be at the level of EUR 1.9 thousand to 2.2 thousand per 1 m2, while in 2020 this figure were from EUR 2 thousand to 2.4 thousand , and in 2019, from EUR 2.4 thousand to 2.6 thousand .

In Famagusta, real estate prices will remain at the level of EUR 2 - 2.7 thousand per 1 m2. In 2020, this figure was equal to EUR 2.3-2.9 thousand per 1 m2, and in 2019 - EUR 3.8-4.1 thousand per 1 m2.

In Larnaca, property prices are expected to be between EUR 2 and 2.7 thousand per square meter in 2021. In 2020, prices in the city were fixed at the level from EUR 2.2 thousand to 2.9 thousand per 1 m2, and in 2019 - from EUR 3.5 thousand to 4 thousand per 1 m2.

Be that as it may, most likely, we will learn the true impact of the coronavirus pandemic on the Cyprus property market only in the second and third quarters of this year.

Nevertheless, COVID-19, like the cancellation of the passport program, will undoubtedly hit sales more than prices. It is unlikely that sellers in general will significantly reduce asking prices, given the low interest rates and the introduction of a mortgage "vacation" in the country.
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