The Cyprus Residential Property Price (RPPI) Index marked its second marginal consecutive quarterly reduction in the fourth quarter of 2020, with the government’s interest rate subsidy scheme offsetting the negative impact of the COVID-19 pandemic and reduced demand due to the termination of the Cyprus Investment Scheme, the Central Bank of Cyprus (CBC) has said.
The RPPI compiled by the CBC in the fourth quarter of 2020 marked a quarterly reduction of 0.2% following a decline of 0.4% in the previous quarter. On an annual basis the index marked a slow down showing in increase of 0.8% in Q4 compared with a rise of 1.2% in the previous quarter.
However, the CBC notes that apartment and houses marked a diverging trend which shows “a differentiation in customer preferences for apartments rather than houses.”
According to the CBC, house prices marked a reduction of 0.5% quarter on quarter as opposed to apartment prices which rose by 0.7% in the last quarter of 2020. Compared with the fourth quarter of 2019 house prices declined marginally by 0.1% while apartment prices rose by 2.7%.
“The state scheme for interest subsidisation for housing loans seems to boosted domestic residential demand particularly in 2020”, the CBC said, noting that recent years showed a change in customer preference to cheaper or smaller residences resulting in an increase demand for apartments over houses.
In short, the restrictions imposed in 2020 due to the COVID pandemic as well as the termination of the CIP inevitably affected transactions in the real estate sector,” the CBC said, noting that the real estate market despite the decline in demand by foreign buyers was boosted by domestic demand facilitated by the government interest rate subsidy scheme.