Recovery in real estate prices continued in the fourth quarter of 2021, driven mainly by domestic demand. However, the Central Bank of Cyprus (CBC) notes that the continuous increase in construction costs due to the war in Ukraine and problems in the supply chain, may negatively affect demand in the future.
The growth of CBC’s Residential Property Price Index (RPPI), accelerated slightly in the fourth quarter of 2021.
According to CBC, the price increase is partly affected by the continuous increase in construction costs (17.3% annual increase during the fourth quarter).
Given that most of the construction materials are imported to Cyprus, CBC points out that the war in Ukraine and supply chain problems affecting international trade are expected to push construction costs even higher, thus affecting demand negatively in the future.
Specifically, according to CBC survey, there was a quarterly increase of 1.3% compared to 0.6% in the third quarter of 2021, while on an annual basis RPPI recorded an increase of 2.6% compared to 1.2% in the previous quarter.
The increase in house prices is driven mainly from apartments market and to a lesser extent from houses.
Specifically, house prices increased on an annual basis by 1%, and on a quarterly basis by 0.7%, while apartment prices increased by 6.3% on an annual basis and by 1.3% on a quarterly basis. According to the CBC, apartment prices increased in all districts, both on a quarterly and annual basis.
The real estate market in the fourth quarter of 2021 continued to rely mainly on domestic demand.
In addition, the transactions in 2021 mainly concerned houses worth between €100.000 – € 300.000, a part of the market that concerns the purchase of main residence or a buy-to-let investment.
CBC also points out that the demand from foreign investors is slowly recovering after the decrease recorded in 2020, after the abolition of the Cyprus Investment Program and the outbreak of the pandemic. This increase is mainly attributed to the attraction of foreign companies who wish to move their headquarters to Cyprus.
Source: Cyprus News Agency