In recent years, Cyprus has witnessed a notable surge in property prices, a phenomenon that has raised concerns among real estate experts and industry insiders. Marinos Kineyirou, the President of the Council for Registration of Real Estate Agents, has been vocal about this growing issue. In this blog post, we will delve into the factors driving the escalating property prices in Cyprus and the potential consequences for the market.
Factors Contributing to Rising Prices
The surge in Cyprus’s property prices can be attributed to several factors, with one of the key drivers being the increasing cost of construction materials. The rising prices of materials necessary for property development have made it more expensive to build new homes, a cost that ultimately gets passed on to buyers and renters.
Additionally, there has been a substantial increase in demand for properties in Cyprus. Factors such as a stable economy, attractive investment opportunities, and a favorable climate have made the country an appealing destination for both local and international buyers. This heightened demand has naturally led to upward pressure on prices.
The Data Speaks
Recent data from the Central Bank of Cyprus (CBC) for the first quarter of 2023 confirms the concerns raised by Marinos Kineyirou. The House Price Index reveals a 7.7 percent increase compared to the previous year. Notably, housing prices have seen an annual rise of 6.6 percent, while apartment prices have surged by 8.4 percent.
For instance, an apartment valued at €150,000 in the first quarter of 2022 is now selling for approximately €163,000. Similarly, a house valued at €250,000 has now risen to around €265,000. These figures highlight the significant growth in property prices over a relatively short period.
The property market in Cyprus is not uniform across all regions. Limassol, in particular, has experienced the most dramatic price increases. During the second quarter of 2023, real estate sales in Limassol reached nearly €500 million in value, with apartments priced between €100,000 and €500,000 being the most sought-after.
In Nicosia, apartment sales accounted for 29.5 percent of the national total. Buyers in Nicosia displayed strong interest in apartments priced between €100,000 and €200,000, with a majority of transactions falling within this range.
Challenges for Households
As property prices continue to soar, households in Cyprus face increasing financial constraints. Rising interest rates add to the burden, making it difficult for prospective buyers to enter the market. For tenants, general inflation erodes their incomes, presenting significant challenges in meeting rental costs.
The Role of Real Estate Agents
Real estate agents, caught in the middle of negotiations between buyers, sellers, and renters, have faced criticism in recent months. It is essential to understand that real estate agents do not determine property prices. They play a crucial role in facilitating transactions and providing guidance to clients within the parameters of the market.
A Call to Action
Marinos Kineyirou and the Council for Registration of Real Estate Agents are committed to addressing the challenges posed by the escalating property prices in Cyprus. While real estate agents may not set prices, they can play a pivotal role in educating clients and advocating for fair and reasonable transactions. It is imperative that action is taken to ensure that the excessive price hikes do not have detrimental effects on the broader economy and the property market as a whole.
As Cyprus grapples with these market dynamics, finding a balance between meeting the needs of property owners and the financial well-being of households is essential. The continued vigilance and responsible practices within the real estate sector will be key in ensuring a sustainable future for the Cyprus property market.