The future of the real estate sector is uncertain amid growing pressures from both the pandemic and other factors, such as the cessation of the Passport program and the projected acceleration of sales, the Central Bank said.
Central technocrats say that despite house prices being partially supported by government measures to help unemployment. The boost mortgage demand and a moratorium on loan instalments, such as the pandemic's pandemic's continuing impact, the cessation of the Passport program, and the acceleration of sales, are expected to put downward pressure prices in the medium term.
Also noteworthy is that according to Eurostat data, house prices in euro area countries increased by an average of 5% year-on-year in the second quarter of 2020. It may indicate a broader trend in house prices at the European level. Due to the Cyprus Investment Program's termination, from November 1, 2020, the Central Bank expects a drop in external demand for real estate, especially for luxury homes. However, he notes that the construction sector's activity is likely to partially recover in the coming quarters. Due to extensive and multiannual projects' reactivation, which had already begun before the pandemic outbreak, foreign interest is.
Regarding real estate prices, the CBC notes that they are partially supported by the government's measures to keep unemployment, strengthen the demand for mortgages, and the moratorium on loan installments. Also indicative is the increase in demand for real estate from locals, which also supports real estate prices. Nevertheless, the sector's future is uncertain amid the increasing pressures coming from the pandemic's impact and other factors such as the cessation of the Passport program, the projected acceleration of sales, etc. The Central estimates that the downward revision of GDP for 2021 is also partly due to the decline in external demand for real estate due to the end of the passport program.