Investing in real estate has always been considered a good idea.
In recent years, this type of investment has been very popular among the residents of Cyprus, mainly due to a significant decrease in interest rates not only on mortgages, but also on savings accounts.
At the same time, we must mention that 2020, as a result of the impact of the coronavirus pandemic, has become one of the most disastrous for the real estate market. However, today home sales are recovering rapidly. Real estate investments are again coming to the fore. Moreover, this trend is observed not only in Cyprus, but also in other European countries.
According to respected European analysts, people do not like to make large investments in times of instability. Therefore, many investors chose not to take risks and not invest their money during the pandemic. According to JLL, the famous global commercial real estate services company, global real estate investment fell 28% in 2020.
However, the housing market in most countries is now experiencing a new boom.
According to Knight Frank experts, home sales are growing at the fastest pace, and the annual growth in prices is expressed in double-digit numbers.
“But even in countries where ageing populations limit demand, price growth has accelerated. With ultra-loose monetary policy holding down borrowing costs, house price inflation now stands in double digits in many developed economies, from Sweden to South Korea, Canada to the Netherlands and New Zealand — with the biggest increases seen not in capitals, but in suburbs, smaller cities and rural areas,” says Oxford Economics.
It is worth noting that the boom is just beginning in Cyprus.
During June, the Land Registry registered 924 contracts for the purchase of real estate, which is 43% more than in June 2020 (646). Sales rose across all sectors - residential, commercial, retail and land.
As for other countries, the UK is experiencing a record boom in home sales outside of London for the first time in its history. One of the consequences of the pandemic has been a change in consumer preferences. They no longer want to dwell in small London apartments, but prefer to buy country houses.
An interesting fact, buyers buy houses without even seeing them, because the demand is very high. Sellers use a practice called gazumping - sellers accept verbal offers on the property from first potential buyers, but then accept higher offers from someone else.
Germany also has one of the largest housing booms ever. The average price for apartments in the country in the first months of 2021 increased by 11.42%.
Demand remains strong, fueled by low interest rates, urbanization and good household finances. In recent years, the migration crisis and strong economic growth have increased the already high demand in the country, local experts say.
The real estate market in Portugal remains one of the most dynamic in Europe. The country saw a boom in the real estate sector in 2019. At the same time, the market remained stable during the pandemic: housing prices in Porto increased by 4%, and in the Algarve - by 12%. Overall, the house price index fell just 1.2% in 2020 to a positive 8.4%. Meanwhile, investments in commercial real estate increased at the end of 2020 and continued to grow also in 2021.
According to Oxford Economics, Sweden is another market that has seen incredible price increases of almost 20% this year. Loans for home purchases hit such a record high that the Swedish central bank was worried about a potential NPL crisis. Unpaid mortgages currently account for 190% of gross disposable income.
In the Netherlands, home prices rose 15% in the first quarter of 2021 compared to the same period last year. According to mortgage broker Willem-Jan Kudeis of De Hypotheker in Utrecht, many in the Netherlands are now buying houses because they have saved enough money to buy during the pandemic.
However, the global real estate boom raises concerns about how young people will gain access to buying real estate. This seems to be a boom for the haves, not the have-nots.
“Every year house prices rise that gap widens out between the haves and have nots, the old and young. The maths of affording property have become much worse over the past year, because young people had suffered job losses and disruption to education that could hit earnings over their lifetime.” says James Pomeroy, an economist at HSBC.
If you are looking for real estate in Cyprus, then contact DOM Real Estate. The website contains a large selection of real estate objects - both residential and commercial. Experienced agency specialists will be happy to help you make the right choice.