Residential Property Prices in Cyprus in the third quarter of 2020 marked their first quarterly drop in four years, while prices showed signs of significant annual deceleration, affected by the coronavirus pandemic, the Central Bank of Cyprus has said.
According to the CBC, the Residential Property Price Index (RPPI) in the third quarter of 2020 dropped by 0.3% marking its first reduction after 16 consecutive quarters of growth. On an annual basis (compared with Q2 of 2019) the RPPI showed a significant slowdown marking an increase of 1.2% compared with 2.2% in the previous quarter.
Furthermore, for the firsτ stime since Q1 of 2016, prices for houses marked quarterly reduction in four districts concurrently. Housing prices in Pafos dropped by 1.8%, 0.5% in the capital Nicosia and in Larnaca and 0.4% in Famagusta.
Appartement prices marked a minor reduction falling by 0,5% compared with the previous quarter in the first quarterly reduction since Q3 of 2016, mainly affected by the pandemic and reduced foreign demand, the CBC said, adding prices of houses dropped by 0.5% compared with the previous quarter of 2020.
“The impact of the pandemic and the reduced economic activity inevitably had effect on the wider real estate market and on construction activity with a spill over effect on the real estate prices,” the CBC said.
The CBC pointed out at the same time that low interest rates and government support measures mainly interest subsidisation for new housing loans supported demand.
On an annual basis, the increase in prices of houses decelerated to 1.2% in Q3 of 2020 from 2.2% in the previous quarter.
Moreover, according to the CBC, the increase rate of appartement prices decelerated to 2.5% while prices rose by 4% each quarter since Q3 of 2017, the CBC said.
“It is evident from the above data that the impact of pandemic, mainly due to the reduction of income, reduced purchases and consequently reduced demand from foreigners had significant effect on the wider real estate market and on prices,” the CBC said.
The CBC also warned that as the real estate market is affected mainly by medium-term and long-term effects, the impact of the pandemic may be more pronounced at the coming periods, adding that prices may receive more downward pressures both due to economic difficulties and rising unemployment and to a lesser extend by the termination of the Cyprus Investment Scheme.