articles | 15 November 2016

Cyprus' house prices drop 0.5% in Q2 2016

House prices continued their downward trend, falling an average 0.5% in Q2 2016, compared to January to March, to a level comparable to 2006, the Central Bank said recently.

The drop in prices in April to June was mainly on a 0.6% quarterly drop in the prices of houses, whereas apartment prices fell only 0.2%.

“The very small changes of the home price index recently reflect a stabilisation trend on the market and/or reversal of negative trends,” the bank supervisor said. In the second quarter of 2015, house prices fell a quarterly 0.8%.

The prices are important to banks because they indirectly affect their capital adequacy, as a large portion of their collateral includes homes.

Home prices fell 1.7% in the second quarter, compared to the respective quarter of 2015, when they fell 5.1%, the bank said. Prices for houses fell an annual 2.1% while those of flats dropped 0.4%.

The Central Bank’s findings, which are based on data collected from commercial banks, differ from those announced by the Cyprus branch of the Royal Institute of Chartered Surveyors (RICS) in October, because it applies a different methodology. RICS said house prices increased a quarterly 0.3% and an annual 1.1% in the second quarter, while apartment prices rose 0.2% and 0.5% respectively.

On a quarterly basis, home prices fell the most in the Famagusta area, where theybecame 2.9% more affordable, followed by Limassol and Nicosia with 0.8 % and 0.6 % respectively, the Central Bank said. In Larnaca and Paphos, they rose 0.4% and 0.1% respectively.

Compared to the second quarter of 2015, the steepest drop in April to June was again in the Famagusta area with a 4.1% drop, followed by Nicosia where home prices fell 3.2%, Limassol with 1.3%, and Larnaca with 0.4%. In Paphos, home prices rose 0.7% “after almost seven years of consecutive annual drops”.

Source: Cyprus Mail

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