House prices continued to increase in Q2, despite COVID-19 uncertainty

House prices continued their upward trend in the second quarter of 2020, recording a quarterly increase of 0.9%, compared to an increase of 0.4% in the first quarter of 2020, despite the growing market uncertainty due to the COVID-19 pandemic, the Central Bank of Cyprus (CBC) notes in a press release on the Residential Property Price Index (RPPI).

House prices increased by 1% while remaining stable in the previous quarter and apartment prices increased by 0.8% compared to a 1.4% increase in the previous quarter. On an annual basis, both house and apartment prices increased during the quarter under review by 1.5% and 4.3% respectively, compared to 0.8% and 4.6% respectively in the previous quarter.

The slowdown in the growth of the Apartment Price Index, according to the CBC, is attributed to the relatively lower demand from foreign investors due to the stricter criteria in the Cyprus Investment Program, but also to the consequences of the Covid-19 pandemic, that enhance the uncertainty during the period under consideration.

The annual increases in house prices, are mainly recorded in Nicosia district and according to CBC this is attributed to the fact that the Cypriots return to the real estate market and gradually begin to buy for housing purposes of for investment. It is also pointed out that real estate as an investment currently offers higher returns compared to other investments or deposits.

During the second quarter of 2020, RPPI increased on a quarterly basis in almost all districts except from Famagusta, where it remained stable. A quarterly increase in house prices was recorded in Limassol by 1.3%, in Nicosia by 1.1%, in Pafos by 0.7% and in Larnaca by 0.1%.

On a yearly basis there was an increase in all districts of the Republic of Cyprus, in Larnaca by 2.6%, in Limassol by 2.4%, in Nicosia by 2.0%, in Famagusta by 1.7% and in Pafos by 1.5%.