THE TWENTY-sixth edition of the RICS Cyprus Property Price Index issued earlier today reports that the average price of residential apartments and houses across the island rose by 1.2% and 1.5% respectively during the first quarter of 2016.
The Index reported price increases in almost all urban centres and all types of property, while prices in other urban centres are gradually bottoming out.
Famagusta recorded the largest increase in apartment prices (1.5%), while the largest increase in house prices (5.6%) was recorded in Paphos.
The value of retail properties fell by an average 0.5%, while the value of offices and warehouses increase by 1.5% and 1.2% respectively.
Compared to the first quarter of 2015, apartment prices have fallen by 0.2%, while house prices have risen by 0.6%. Prices of retail properties and warehouses have fallen by 1.3% and 2.3% respectively, while the price of offices has risen by 0.7%.
Given the prevailing economic conditions and the turbulence in the Cyprus banking system, there were relatively few transactions during the quarter of 2016 although volume was higher on a year on year basis.
Local buyers in particular were the most discerning as unemployment and high debt for locals maintained lack of interest. Furthermore, those interested are in purchasing property are trying to access bank-finance.
Rental Values
Across Cyprus, on a quarterly basis rental values increased by 3.6% for apartments, 1.8% for houses, 0.2% for retail, 0.4% for warehouses and office rents increased by 0.6%.
On an annual basis rents increased by 4.2% for apartments, 2.4% for houses and 2.4% for offices, while retail and warehouses dropped by 3.2% and 2.1% respectively.
Gross yields
At the end of the first quarter of 2016 average gross yields stood at 4% for apartments, 2.0% for houses, 5.2% for retail, 4.3% for warehouses, and 4.4% for offices.
The parallel reduction and/or stabilisation in capital values and rents is keeping investment yields relatively stable and at low levels (compared to yields overseas). This suggests that there is still room for some re-pricing of capital values to take place, especially for properties in secondary locations.