Residential property prices and rents continued to fall in Cyprus
in the third quarter of 2011 Cyprus rental prices and purchase for sale prices have fallen, according to the quarterly index from the Royal Institution of Chartered Surveyors.
Property prices have been affected by financial problems in the eurozone and by an explosion at the Evagelos Florakis Naval Base which severely damaged the country’s main electric power station.
‘The combination of the turmoil in Greece with this unfortunate event caused severe disruptions in daily lives and a loss of people’s confidence in the abilities of the state. In turn, the explosion led to numerous accusation and discussions by parliamentarians and government officials which escalated causing political instability,’ said Pavlos Loizou of RICS Cyprus.
‘Whilst the first and second quarters saw some signs of muted economic growth, the third quarter saw investors postpone their decision making and banks retrenching by limiting the amount of credit available. In turn this led to a low transaction turnover and to reduced interest, especially by local buyers, as they were affected by the increased tension between government and parliament,’ he added.
The index shows that prices for both houses and flats fell by 1.7% and 4.4% respectively during the third quarter of the year. Nicosia saw the biggest drop in apartment prices, down 5.3%, while the biggest drop in house prices was in Limassol, a fall of 3.8%.
Compared to the third quarter of 2010, apartment and house prices have fallen by 10.7% and 6.7% respectively.
Over the quarter, average rental prices for apartments and houses fell by 2% and 0.5% respectively. However, rental values for houses in Nicosia increased, up by 5.9%.
Compared to the third quarter of 2010, rents for apartments have dropped 11.4% and those for houses are down 6.6%.
RICS said that landlords are lowering their rents in order to attract tenants. At the end of the third quarter average gross rental yields stood at 3.7% for apartments and 2% for houses.