Improving economy helping continued property market recovery in Cyprus
A further recovery in the economy in Cyprus is helping the Mediterranean island’s property markets recover with prices up consistently in the second quarter of 2018.
Across Cyprus prices for houses increased by 2.1% quarter on quarter and prices for flats rose by 1.3%, according to the latest quarterly index from the Royal Institution of Chartered Surveyors (RICS).
The strongest residential markets were in Famagusta where flat prices increased by 4%, and Larnaca where house prices increased by 6.7%, the index also shows.
Values for holiday homes on a quarterly basis increased across the islands with flats up 2.8% and houses up 1.5%. The biggest increase in this sector was a rise of 7% for flats and houses in Larnaca.
Year on year prices for flats increased nationally by 7.6% while house prices were up on an annual basis by 4.8%, offices up by 11.6%, warehouses by 4.2% and retail by 1.7%.
The report points out that during the second quarter of 2018 the Cyprus economy showed further signs of recovery, with a seasonally adjusted quarterly GDP growth of 0.8% and an annual seasonally adjusted GDP growth of 3.9%.
Unemployment dropped significantly to 7.3% from 10.6% a year ago and from the record high of 17.6% in the first quarter of 2015 while an improved confidence in the Cyprus banking system and the improved availability of finance have led to relatively higher transaction volumes, which further enhanced market sentiment.
Overall, the index has recorded increases on an annual basis in all cities and asset classes, with significant increases being recorded in Limassol, Nicosia and Larnaca, whilst Paphos and Paralimni have shown smaller annual increases.
Across Cyprus, on a quarterly basis rental values increased by 2.9% for apartments, 3.9% for houses, 1% for retail, 1% for offices and 0.4% for warehouses. On an annual basis, rents increased by 18.0% for flats, 17.7% for houses, 3.8% for retail, 14.3% for offices and for warehouses 1.9%.
All asset classes have shown a consecutive quarterly growth. At the end of the second quarter average gross yields stood at 4.5% for apartments, 2.4% for houses, 5.5% for retail, 4.2% for warehouses, and 5.1% for offices.
The proportionately higher quarterly rental increases compared to quarterly price increases have marginally improved yields for apartments and offices, the report added.