Central Bank of Cyprus is judging that the price increases in the coastal areas are in danger for the entire real estate market.
The potential for a further upward trend in the real estate sector in 2020 is limited, due to reduced interest from foreign investors as a result of the stricter criteria of the Cyprus Investment Program.
Based on quarterly bulletin announced by the Central Bank, from the second quarter of 2019 onwards, the demand for real estate related to the KEP is slowing down, mainly due to the change in the program’s criteria in May 2019, which creates new data and significantly affects the dynamics of the real estate sector. It is recalled, however, that the new regulations for the program are expected, as well as the government’s intention to restore it dynamically in the context of the economy’s recovery from the recession.
The Central Bank continues to have real estate under close surveillance in Limassol as well as in Larnaca, judging that the price increases in the coastal areas are in danger for the entire real estate market. Since the end of 2019, the Central Bank has put real estate in the frame of developments in the city of Larnaca as well, finding that, as in Limassol, prices on the coastal front are growing faster than elsewhere. This is partly due to the purchase of real estate by foreigners to secure a Cypriot passport.
The large increase in prices in coastal areas began to spread mainly in 2019 and in other non-coastal areas of Limassol, where in about a year apartment prices increased by approximately 6.4%, compared to a 10% increase in the same period in coastal areas. As for Larnaca, the increase in apartment prices on the city’s main coastal front for the period 2017-2019 was between 13% - 25% (depending on the region), with most of the increases occurring in 2019. For the entire province of Larnaca the average annual increase in apartment prices for the same period was only 4.1%.
On a quarterly basis, apartment priced rose 2.9% in Famagusta, 2.4% in Limassol, 1.7% in Larnaca, 0.7% in Nicosia and 0.5% in Famagusta. In an annual basis, apartment prices rose for the sixth consecutive quarter in all provinces, with the largest in Larnaca (8.3%) and Limassol (6.5%), 5.3% in Paphos, 2.3% in Famagusta and 2.1% in Nicosia.
In terms of house prices, quarterly increases were recorded in Famagusta (1.0%), Paphos (0.6%), Nicosia (0.4%) and Larnaca and Limassol (0.1%). On an annual basis, house prices rose in all provinces. In Paphos, house prices rose by 4.3%, in Limassol by 3.2%, in Nicosia by 2.0%, in Famagusta by 1.7% and in Larnaca by 0.8%.
Source: Philenews.com