Cyprus house sales highest increase in EU in 2022

Nigel Howarth
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Cyprus house sales highest increase in EU in 2022

The number of housing transactions in Cyprus rose 27.4% in 2022 compared to 2021; the highest percentage increase of the 16 EU member states.

Interestingly, in 2022, the number of housing transactions fell in 10 EU member states following an increase in nearly all countries in 2021 compared with 2020.

According to Eurostat, the statistical office of the European Union, the largest decreases in the number of transactions in 2022 were recorded in Denmark (-31.6%), Finland (-16.6%), the Netherlands (-16.2%) and Luxembourg (-15.1%), while the highest increases were registered in Cyprus (+27.4%), Ireland (+7.7%) and Spain (+6.0%).

Since COVID-19 started, the housing market has been volatile. In 2020, there was a general drop in housing transactions due to lockdown measures, with only four (Denmark, Finland, the Netherlands and Austria) of the EU countries covered registering an increase in sales.

House sales in EU member states 2021 vs 2022

This was followed by a period of growth in 2021, with sales going up in the 16 EU countries covered, except for the Netherlands and Luxembourg. The market was so hot in 2021 that 11 out of 16 countries with available data registered annual rates of change above 10%, with the highest increases recorded in Spain (+39.3%) and Bulgaria (+39.0%).

House sale statistics notes:

House sales statistics are provided by Member States on a voluntary basis. Data on the number of housing transactions are available for 16 EU countries.

The data covers the transactions of new and existing dwellings (apartments and houses) where the buyer is a household.

Further reading

House sales down in 2022 after increase in 2021

Mortgage to rent scheme launched

Editorial
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Mortgage to rent scheme launched

The government greenlighted the mortgage-to-rent scheme, the latest lifeline for defaulted borrowers, following approval from the European Commission.

Government spokesperson Konstantinos Letymbiotis on Wednesday told reports the scheme will be going ahead.

It has lingered in EU hallways since the Anastasiades administration submitted it for review last summer.

The Directorate-General for Competition (GDA) of the European Commission held up the scheme as it ruled that one of the fundamental parameters violated the bloc’s legislation on state aid.

The Commission rejected an earlier request by the Republic to include non-performing loans secured by a main residence in the scheme, the market value of which would be up to €350,000.

Finally, the GDA accepted the market value to be limited to €250,000, pointing out that based on the cost of living in Cyprus, a residence worth €350,000 cannot concern vulnerable households.

Letymbiotis said the scheme would allow vulnerable households that have defaulted on their mortgage to remain in their primary residence as tenants paying rent instead of an instalment.

He said that with the new plan, vulnerable households could live in their main residence as tenants and be exempt from the mortgage.

The state will fully cover the required rent on behalf of residents, who will then have the chance to buy back the property after five years at a favourable price below the purchase level.

Recipients of welfare with non-performing loans on 31/12/2021, which remained non-performing on 31/12/2022, with a main residence at a market value of €250,000, will have the right to join the scheme.

A second category of beneficiaries on benefits deemed unviable for the state’s previous two schemes for defaulted borrowers — Estia and Oikia.

The value of their primary residence should not exceed €350,000.

The third category consists of all the Estia and Oikia schemes applicants who were originally approved for inclusion in the plans but were subsequently dropped from the scheme and deemed unviable.

“The plan is consistent with the government’s policy to reduce non-performing loans and strengthen affordable housing,” Letymbiotis said.

KEDIPES, the state-funded asset management company operating the scheme, will buy asset-backed mortgages at 65% of their values from banks.

Beneficiaries will pay rent according to the price at which KEDIPES bought the property and the agreement’s timeframe.

The mortgage-to-rent agreement entails a minimum of 14-year payment duration, while borrowers could submit a proposal to acquire the property after five years.

Beneficiaries over 65 will not be given a specific timeframe to pay off their mortgage.

Real estate sales slow due to rates, inflation

Editorial
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Real estate sales slow due to rates, inflation

The value of transactions in the real estate sector reached €1.52 billion in the second quarter of 2023, with the market bearing the impact of higher interest rates, inflation and increased construction cost.

According to data compiled by the Council for Registration of Real Estate Agents, transactions in real estate were a higher €1.7 billion in the two previous quarters.

Marinos Kineyirou, the Council’s President, said the property market has shown resilience, but “challenges are increasing and should not be underestimated by anyone.”

“The real estate sector has a large contribution to the economy, and the government should strengthen the sector to maintain its momentum,” he added.

According to the data, a total of 5,974 transactions were made valued at €1.52 billion, which was lower compared to the first quarter in terms of value and transactions.

Compared with Q2 2022, the number of transactions was broadly the same, but the value rose significantly, driven by the increased prices.

The value of real estate sold in Q2 last year was €1.2 billion.

Nicosia and Famagusta were the only districts to record an increase in property values sold during Q2 compared to the previous quarter.

In Nicosia, the value of properties sold (€299.8 million) rose despite the decrease in the volume of sales transactions (1549).

On the contrary, in Famagusta, the increase in value (€59.7 million) was accompanied by increased sales transactions (303).

A significant decrease was recorded in Limassol; the value of properties sold decreased by €200 million compared to the first quarter, reflecting the significant dip in sales.

Paphos also lost ground regarding value and sales volume compared to the previous quarter.

In Larnaca, the volume of transactions was higher in Q2 than in Q1, but the value of the properties was slightly lower.

President calls for meeting on foreclosures issue

Andria Kades
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President calls for meeting on foreclosures issue

President Nikos Christodoulides has called for a meeting with all political parties at the presidential palace on Monday, to discuss foreclosures.

The aim is to hold a discussion ahead of plenum’s vote over two bills aimed to tackle non-performing loans (NPLs). The meeting is set for 6pm at the presidential palace.

Meanwhile, Finance Minister Makis Keravnos is also slated to be at the joint House finance and legal committee in parliament on Monday morning, to brief MPs over the government proposals.

During Thursday’s plenum, deputies decided to postpone voting two bills that aim to tackle the issue of NPLs, including a proposal that would allow debtors to set aside repossessions with a court order.

It has since been delayed to the following Thursday.

“The finance ministry has been working intensively for the past two to three weeks to prepare everything,” undersecretary to the president Irene Piki told the state broadcaster.

She specified the ‘mortgage to rent‘ scheme is slated to be approved in next week’s cabinet session, while the finance ministry is trying to prepare all the details on how people would be able to apply.

“It aims to help vulnerable groups.”

Another proposal the government is trying to thrash out ahead of plenum’s vote is to amend the existing Estia scheme, with new income criteria.

Piki anticipated this will take “quite some time” as it also needs approval from competition authority.

Last week, cabinet decided foreclosures will be suspended until the end of October, to give government time to prepare a holistic package of measures. Lenders also agreed to desist from home repossessions for primary residences valued at €350,000.

The government proposals, leaked to the Cyprus News Agency, build on Akel’s idea on debt-for property swaps at the market value of the property, rather than the price of a forced sale.

On the Disy-Diko joint proposal that repossession notices must cite the outstanding debt balance, the finance ministry adds that banks should also cite the dates of any and all notices sent to a debtor.

Regarding the mortgage-to-rent scheme, Keravnos outlined to parliament that it has got the green light from the European Commission. Further, the scheme will be communicated to banks and credit-acquiring companies, who have until September to join the scheme.

The government package also includes the intention to let the financial ombudsman hire more staff.

House prices in Cyprus have fallen 2 per cent since 2010

Nigel Howarth
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House prices in Cyprus have fallen 2 per cent since 2010

Cyprus is one of only three EU members states where house prices have fallen since 2010 according to Eurostat, the statistical office of the European Union.

Between 2010 and the fourth quarter of 2022, prices have fallen in Greece (-14%), Italy (-9%) and Cyprus (-2%).

Over the same period, prices have more than doubled in seven EU member states; Estonia (+200%), Hungary (+180%), Lithuania (+146%), Latvia (+132%), Luxembourg (+126%), Czechia (+123%) and Austria (+122%).

Rental prices increased in 26 EU countries and decreased in one, with the highest rises in Estonia (+212%) and Lithuania (+165%). The only decrease was recorded in Greece (-22%).

EU house prices and rents commentary

In the first quarter of 2023, prices in the EU decreased by -0.7% compared with the fourth quarter of 2022, while rents increased by 0.9%. This is the second quarterly decrease of prices in a row after a -1.4% decrease in the fourth quarter of 2022.

Compared with the first quarter of 2022, rents and prices in the EU increased with a 2.9% rise in rents and a 0.8% increase in house prices.

Prices and rents in the EU followed a similar increasing path between 2010 and the second quarter of 2011. However, after this quarter, prices and rents have evolved differently. While rents increased steadily throughout this period up to the first quarter of 2023, prices fluctuated considerably.

Line graph: House prices and rents, Index levels (2010=100), Q1 2010-Q1 2023
Line graph: House prices and rents, Index levels (2010=100), Q1 2010-Q1 2023 (Picture credit: eurostat)

After a sharp decline between the second quarter of 2011 and the first quarter of 2013, prices remained more or less stable between 2013 and 2014. After a rapid rise in early 2015, prices increased faster than rents until the second quarter of 2022. In the third quarter of 2022, prices increased at the same pace as rents (both +0.7% compared with the second quarter of 2022). Since the fourth quarter of 2022, prices have started to fall whereas rents continued to increase.

From 2010 until the first quarter of 2023, rents increased by 20% and prices by 46%.

Further reading

Eurostat press release: Rents rise, house prices fall in the EU in Q1 2023

Eurostat price index for Cyprus

The following chart, which plots the annual average rate of change in the price index for Cyprus from 2005 to 2022, has been extracted from the eurostat home price index database.

Cyprus house price index 2005-2022

 

House price index up 5.9% year-on-year

Nigel Howarth
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0
House price index up 5.9% year-on-year

The Cyprus House Price Index (HPI) rose by 5.9 per cent on an annual basis in the first quarter of 2023 according to preliminary figures in a press release issued by the island’s Statistical Service (CYSTAT).

The HPI also rose by 2.0 per cent in the first quarter of 2023 compared to the previous quarter.

The base year for the HPI is 2015=100 and the Index now stands at 110.14.

According to the CYSTAT, the Cyprus House Price Index (HPI) “is a quarterly index which measures the change in the average prices of residential dwellings. It captures all types of residential properties, both new and existing. The land component of the residential property is included.

“The data source used for both, indices and weights, is the Department of Lands and Surveys, Ministry of Interior. The data cover all areas which are under the control of the government of the Republic of Cyprus.

“Data are marked as provisional and are revised as soon as new information is available.”

Year Quarter House Price Index
(2015=100)		 Quarterly Change
(Compared to the
previous quarter) (%)		 Annual Change
(Compared to the same quarter
of the previous year) (%)
2010 Q1 114.37 -1.6 -6.6
Q2 112.79 -1.4 -6.9
Q3 112.39 -0.4 -5.7
Q4 112.05 -0.3 -3.6
2011 Q1 111.56 -0.4 -2.5
Q2 113.99 2.2 1.1
Q3 111.22 -2.4 -1.0
Q4 107.60 -3.2 -4.0
2012 Q1 106.40 -1.1 -4.6
Q2 106.02 -0.4 -7.0
Q3 110.14 3.9 -1.0
Q4 108.22 -1.7 0.6
2013 Q1 104.54 -3.4 -1.7
Q2 104.77 0.2 -1.2
Q3 103.05 -4.7 -9.3
Q4 100.78 0.9 -6.9
2014 Q1 98.08 -2.7 -6.2
Q2 103.55 5.6 -1.2
Q3 102.70 -0.8 2.8
Q4 101.56 -1.1 0.8
2015 Q1 97.52b
Q2 100.59 3.1
Q3 102.49 1.9
Q4 99.40 -3.0
2016 Q1 97.29 -2.1 -0.2
Q2 99.18 1.9 -1.4
Q3 101.87 2.7 -0.6
Q4 102.72 0.8 3.3
2017 Q1 99.64 -3.0 2.4
Q2 102.74 3.1 3.6
Q3 102.46 -0.3 0.6
Q4 105.24 2.7 2.4
2018 Q1 103.10 -2.0 3.5
Q2 104.01 0.9 1.2
Q3 103.12 -0.9 0.6
Q4 107.04 3.8 1.7
2019 Q1 107.93 0.8 4.7
Q2 112.73 4.5 8.4
Q3 105.64 -6.3 2.4
Q4 106.51 0.8 -0.5
2020 Q1 109.13 2.5 1.1
Q2 109.48 0.3 -2.9
Q3 104.21 -4.8 -1.3
Q4 109.10 4.7 2.4
2021 Q1 102.82 -5.8 -5.8
Q2 104.07 1.2 -4.9
Q3 106.55 2.4 2.2
Q4 103.28 -3.1 -5.3
2022 Q1 103.95 0.5 1.1
Q2 106.35 2.3 2.0
Q3 112.51 5.8 5.3
Q4 108.03 -4.0 4.4
2023 Q1 110.14 2.0 5.9

b There is a break in the series in the first quarter of 2015 due to redefinition of the model variables.

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