Due to this and the turbulence in Cyprus’ banking system there was a sharp reduction in interest from buyers and those interested were unable to access bank finance or their deposits, the report says.
An increase in unemployment, further decreases in salaries also had an impact on the Mediterranean island’s property market but the report says there were also signs of the Cyprus economy stabilising.
Overall the Cyprus Property Price Index recorded falls in almost all cities and asset classes, with significant falls being recorded in Nicosia and Limassol.
‘Nicosia is clearly feeling the impact on the government and banking sector, the two sectors who dominate the local employment market, whilst other cities are progressively bottoming out,’ the report points out.
Across Cyprus, residential prices for both houses and flats fell by 1.4% and 2.6% respectively, with the biggest drop being in Famagusta where the price of houses declined by 4% and flats by 9.3%.
Values of retail properties fell by an average of 1.7%, whilst those of offices and warehouses fell by 1.4% and 0.9% respectively.
It means that compared to the first quarter of 2013, prices for flats have gone down by 10.7%, and houses by 7.8%. In the commercial property sector retail property has fallen by 14.8% year on year, offices by 10.4% and warehouses by 11.4%.
Across Cyprus, on a quarterly basis rental values for apartments decreased by 1.4%, house rentals by 1.6%, retail units by 1.2%, warehouses by 3.1% and offices by 1.2%.
Year on year apartment rents have fallen by 11.3%, houses by 12.6%, retail property by 23.3%, warehouses by 14% and offices by 15.4%.
‘The majority of asset classes and geographies continue to be affected, with areas that had dropped the most early on in the property cycle now nearing the trough, the report adds.
It also shows that at the end of the first quarter of 2014 average gross yields stood at 3.9% for apartments, 1.9% for houses, 5.3% for retail, 4.4% for warehouses, and 4.3% for offices.
‘The parallel reduction in capital values and rents is keeping investment yields relatively stable and at very low levels compared to yields overseas. This suggests that there is still room for re-pricing of capital values to take place,’ the report concludes.
