Property prices in Paphos and Famagusta are “progressively bottoming out” according to Royal Institute of Chartered Surveys (RICS) Cyprus, although overall prices in Cyprus are still falling.
The quarterly RICS Cyprus Property Price Index monitors the urban centres of Nicosia, Limassol, Larnaca, Paphos and Paralimni- Famagusta.
The RICS press release does not provide full comparisons with previous quarters but according to our analysis of the index over two quarters, prices of medium-quality two-bedroomed apartments in Cyprus as a whole dropped to €100,867 in the second quarter of 2015 from €101,320 in the second, while prices of houses fell to €327,748 in the second quarter from €328,590 in the first.
Apartment prices in Paphos fell to €96,545 in the second quarter, down from €96,413 in the first. However, the average price of houses in Paphos rose to €349,851 from €347,743 in the first quarter.
RICS said that it “significant falls” were recorded in Nicosia and Larnaca.
The biggest drop regionally was in Larnaca (1.2% for flats) and 3% for houses.
“Nicosia is clearly feeling the impact on the government and banking sector (the two sectors who dominate the local employment market),” RICS said.
On the other hand, it said that “Paphos and Famagusta are progressively bottoming out.”
“The majority of asset classes and geographies continue to be affected, with areas that had dropped the most early on in the property cycle now nearing or at the trough, e.g Paphos and Famagusta are showing some signs of price stability,” said RICS.
Since the fourth quarter of 2009 the biggest fall has been in retail properties, followed by apartments, warehouses and offices and finally houses. Inferring from the chart, it looks as though house prices have started to stabilise.
Rental yields at 3.8%
As regards rental values, RICS said that these fell on average in Cyprus by 0.3% for apartments, 2% for houses, 1.1% for offices, 2.1% for retail units and 1.4% for warehouses.
Gross yields on rents were 3.8% for apartments in the second quarter but only 1.9% for houses. These yields are low by historical standards but in the current low interest-rate environment this is higher than what many banks are offering.
Rental yields were higher for commercial property: 5.2% for retail, 4.3% for warehouses and 4.4% for offices.
RICS said the reduction in 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 properties in secondary locations.”
Actual rental values fell by 0.3% for apartments, 2% for houses, 1.1% for office, 2.1% for retail units and 1.4% for warehouses.
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