THE ECONOMIC crisis contributed to a “disappointing” drop in Cypriot property prices in the last quarter of 2010, the fifth official survey of house prices revealed yesterday.
The Royal Institute of Chartered Surveyors’ (RICS) property index ending December 31, 2010, recorded prices drops in all categories (apartments, houses, retail, warehouse and office spaces) and districts bar one: warehouses in Famagusta.
Year-on-year, prices dropped by 10.8 per cent for apartments, 7.4 per cent for houses, 7.0 per cent for retail, 6.3 per cent for office, and 4.8 per cent for warehouses.
The report said: “The Property Price Index has recorded disappointing behaviour in property prices across Cyprus’ major urban areas, with prices and rents falling across all districts.”
The survey report attributes the price drop to the after effects of the economic crisis.
It said: “During the second half of 2010 Cyprus bore the aftershock of the global economic crisis, with the economy slowing down and the government’s income decreasing.”
The report said that the fourth quarter saw some signs of stabilisation and muted growth in the economy, despite investors’ concern over the Greek and local economy.
“Towards the end of the year there were some early signs of price stabilisation, with local buyers returning to the market taking advantage of lower prices for holiday homes and for permanent residence” the report said.
However, the RICS also said these signs should be viewed in the wider context of financial institutions’ loan curtailment, reduced income as a result of inflation and salary reductions and changing expectations of future changes in capital values.
Across Cyprus, rental values for apartments fell by 5.5 per cent, for houses 5.9 per cent, retail units 3.8 per cent, warehouses 4.4 per cent and offices 2.7 per cent.
Year-on-year rents dropped by 7.2 per cent for apartments, 11.8 per cent for houses, 8.5 per cent for retail, 3.0 per cent for office and 3.9 per cent for warehouses.
The quarterly change in capital and rental values shows that all aspects and geographies of the property market are now affected, and that landlords are lowering their rents in order to attract tenants.
“In parallel” the report says “many tenants are renegotiating their leases or moving to smaller or lower cost accommodation.”
RICS said the reduction in rents will have a profound effect on the incomes of many locals and overseas owners. This is likely to increase the downward pressure on prices as the discrepancy between rent and a capital value is accentuated.
The Royal Institution of Chartered Surveyors is the largest organisation for professionals in property, land, construction and environmental assets worldwide.
The organisation was created in 1868 and now has over 140,000 members in 146 countries.
