Gentle price reduction of real estate in 2012

  Article By : Marinos Kineyirou|  Published at : Politis Newspaper| 12-08-2012

Marinos Kineyirou: Vice-president of the Cyprus Association of Estate Agent Entrepreneurs, President of the Real Estate Agent Entrepreneurs Association of Larnaca- Famagusta and Property Auctioneer.

Marinos kineyirou Manager of Marinos Estate Agencies LTD

Marinos Kineyirou Manager of Marinos Kineyirou Estate Agencies LTD

 GENTLE PRICE REDUCTION OF REAL ESTATES IN 2012

The Cyprus Real Estate Agents Association (CREAA) informed us of the continuous price decline in houses and apartments in 2012 too, by 1% for the 1st quarter of the year compared to the 1.8% in the last quarter of 2011. The reductions in house prices seem more mild compared to the previous quarter in all provinces, with the exception of Paphos district, which recorded a decrease of 3.1%, and Famagusta with a decrease of 2,4%.

The deceleration of the negative route observed in the real estate market is primarily due to the implementation of new legislative measures appointed by the amending Act for the transfer fees (Published on 02.12.2011 and valid until 01/06/12) which entailed the suspension of payment for real estate’s transactions paying VAT and 50% reduction for cases not paying VAT. The law aimed at stimulating the housing market, but these measures failed to reverse the negative trend in house prices.

The biggest quarterly declines in housing prices were recorded in Paphos district with 3.5% and in Larnaca with 2.8%, while the largest quarterly decline in apartment prices was observed in Famagusta with 2.7%.  Limassol district though, recorded an increase in apartment prices by 0.2%, while Nicosia had the smallest decline in housing prices by 0.5%.

The Vice-president of the Cyprus Association of Estate Agent Entrepreneurs, President of the Real Estate Agent Entrepreneurs Association of Larnaca- Famagusta and Property Auctioneer, Mr. Marinos Kineyirou, stated that the annual house prices fell by 4.9%, with the largest annual decrease to be observed in Paphos by 10, 6% in housing prices and 10.2% in apartment prices. The smallest reduction in housing prices appeared in Nicosia district with 3.2% and in Limassol apartments prices fell by 3.1%.

According to the data from the Department of Lands and Surveys, the number of deeds in the first quarter of 2012 was 5.3% higher compared to the previous year.

It was observed that the annual increase of transactions was attributed to local buyers by 17.3%, while transactions involving foreign markets continued their negative trend showing an annual decrease of 25.5%.

It is interesting that the indicator of intent to buy or build a house in the next 12 months is in very negative levels, reaching -85.7%, which shows the stagnation of the housing market.

Mr. Kineyirou states that the problem is due to the lack of liquidity in the Cyprus market, the high mortgage rates as well as the stricter lending criteria. The mortgage rate increased to 5.4% in the first quarter of 2012 compared to the 5% in the first quarter of 2011.

The President of the Real Estate Agent Entrepreneurs Association of Larnaca- Famagusta and Property Auctioneer, Mr. Marinos Kineyirou emphasized that the lack of liquidity in the market along with the consolidation measures regarding the economy, make the prospects for a potential recovery of the property market bleak. However, the safest investment is in real estates which proved to offer significant gains, being a safe and secure investment.

The data are representative of the Cyprus property market, covering all the free areas of the Republic of Cyprus and referring to all residential properties (houses and apartments). The residential property price indices in Cyprus are prepared by the Central Bank of Cyprus’s Real Estate Unit (REU), which is part of the Statistics Department of the Central Bank of Cyprus (CBC) in collaboration with member banks of the Association of Cyprus Banks and the Cooperative Central Bank.

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