Compared with the third quarter of 2016, house prices rose in July to September by 1.4%, the central bank said in a statement on its website on Tuesday. The increase was mainly on a 3.7% annual increase of flat prices against a 0.7% rise in house prices.

“Annual increases were recorded in the majority of the main and secondary indicators, and the highest were recorded in the Nicosia and Limassol districts,” the central bank said.

House and flat prices rose in the third quarter by a quarterly 0.3% and 0.5% respectively, the bank supervisor said. House prices recovered for a third consecutive quarter while those for apartments rose for the fifth quarter in a row.

The residential property price index recovered to 74.3, the highest since the second quarter of 2015. Home prices peaked in the third quarter of 2008 and fell to 73.2 in the second quarter of 2016, the lowest point since its introduction 12 years ago.

“The real estate sector’s prospects are favourable,” the central bank said. “Building permits and demand for housing loans are recording an increase while construction activity continues to recover. However, non-performing loans remain a challenge and an important obstacle towards full recovery while the impact of the imposition of value added tax (VAT) on plots is still undetermined”.

“Still, expected growth in the economy in general is believed to support the sector,” it added.

Compared with April to June, house prices rose in the second quarter in all districts except Paphos where they dropped by 0.8%, the bank supervisor said. Home prices rose by 0.4% in Nicosia, 0.6% in Limassol, 1% in Larnaca and 1.1% in Famagusta.

Compared with the third quarter of 2016, home prices rose in July to September by 2.6% in Limassol, 1.3% in Nicosia and 1.6% in Famagusta, the central bank said. They fell in Larnaca and Paphos by 0.7% and 0.8%, respectively.

Source: Cyprus Mail