Cyprus’ property market is beginning to improve after 7 years of decline in house prices, despite its recovering economy. The falling trend in house prices has shown a deceleration in recent times. The number of property transactions is increasing. The construction of residential buildings is also rising.
These new growth trends come after the passage into law, a “Trapped Buyer’s Law” which gives access to title deeds. This new regulatory policy allows for greater accountability and procedures. It also exempts buyers who buy in 2016 from all forthcoming capital gains taxes, and issues them a 50 percent rebate on Title Deeds transfer tax.
In 2015, the nationwide residential property price index fell 1.8 percent but when adjusted for inflation, results showed that it actually rose slightly by 0.17 percent, based on the numbers released by the Central Bank of Cyprus. In the fourth quarter of 2015, the price of residential property remained stable for three months.
This was backed by the figures revealed by the Royal Institution of Chartered Surveyors (RICS), which reported that the price of housing in Cyprus dropped by 1.42 percent year over year in 2015, to an average of €372,714. House prices also rose by 0.56 percent nationwide in 2015, when adjusted for inflation. House prices fell 0.8 percent (-1.46 percent inflation adjusted) quarter over quarter in Q4 2015.
- In Cyprus’ capital, Nicosia, the price of housing dropped by 1.42 percent (rose 0.56 percent inflation-adjusted) to a standard price of € 372,714 (US$414,065)
- In Paphos house prices increased by 3.1 percent (5.7 percent adjusted for inflation) to an average price of €353, 991 (US$393,265)
- In Farmagusta-Paralimni, house prices were stable at €320,916 (US$356,520) (rose by 2.1 percent when adjusted for inflation)
- In Larnaca, house prices fell by 0.04 percent (rose 1.97 percent inflation-adjusted) to a standard price of €277, 222 (US$307,978)
- In Limassol, price of housing declined by 3.18 percent (-1.23 percent adjusted for inflation) to an average price of €304,105 (US$337,844)
Not unexpectedly, the price of apartments has also followed in the direction of house prices. Paphos was the only district that saw a minor rise in price of 0.14 percent (2.14 percent inflation-adjusted) year over year in 2015, to an average of €96,545 (US$107,256). Nicosia, on the other hand, experienced the most significant drop of all districts in Cyprus, with the regular apartment price dropping by 2.97 percent (-1.02 percent inflation-adjusted) in 2015, to €105,254 (US$116,931). It was followed by Farmagusta-Paralimni, with price of apartments dropping by 2.45 percent (-0.5 percent inflation-adjusted), Limassol -2.41 percent (- 0.46 percent inflation-adjusted), and Larnaca -1.08 percent (0.9 percent inflation adjusted).
The extensive housing market improvement is mainly influenced by Cyprus’ recovering economy. In 2015, the economy improved by 1.6 percent, after the yearly declines of 2.5 percent in 2014, 5.9 percent in 2013, and 2.4 percent in 2012, according to the International Monetary Fund (IMF). The economy is expected to grow by 1.6% this year and by another 2% in 2017.