Marinos Kineiro, President of the Board of Registration of Real Estate Agents, said on Wednesday that the Cyprus property market is not currently experiencing a bubble, despite the fact that prices do rise.
“It is a matter of course and expected that as raw material prices continue to rise, the final sale prices of new properties will inevitably rise,” Kineiro said, explaining that the cost will also be increased for those intending to renovate or improve. their properties.
“How much prices rise will depend mainly on price dynamics at the international level, as well as the period of time for which they remain high,” he added.
However, the president of the council said that it would be worthwhile to further contextualize the prices currently observed in the Cypriot real estate market.
First, he referred to a report recently released by the Central Bank of Cyprus showing the property price index for the fourth quarter of 2021.
According to the index, residential property prices rose 1% year on year for homes and 6.3% year on year for apartments.
Overall, the market experienced a price increase of 2.6% year on year, which is lower than the GDP growth of Cyprus over the same time period.
At the same time, construction costs rose by 17.3% year on year in the fourth quarter of the previous quarter, which will inevitably affect how property prices are calculated, especially in the coming months.
The demand for apartments is especially high both from Cypriots and from foreign buyers.
With regard to interest from foreigners, it is expected to grow due to the increase in the number of foreign workers who have already moved to Cyprus or are planning to do so in the short to medium term.
The influx of highly qualified specialists was facilitated by the recent interest of many Ukrainian and Russian companies in moving their activities to the island.
“In this context, reports of a bubble in the sector and so on are gradually returning to the realm of public debate,” Kineiro said, noting, however, that “a bubble is out of the question for a number of reasons.”
Kineiro said the rise in prices late last year was considered normal and was driven by increased organic demand for residential property.
“The expected additional increase in prices, primarily for new buildings, is solely due to the increase in the prices of raw materials at the international level and is a phenomenon that affects not only Cyprus,” said Kineiro.
Kineiro also compared the current market situation to the years leading up to the 2013 financial crisis, when prices were just as high.
“According to the Central Bank Real Estate Index, prices are still much lower than in 2007 when they peaked, and also compared to 2010 or 2012 if we want to go back a decade,” said the council chairman.
In addition, he noted that prices in the fourth quarter of 2021 were 19% lower than in the first quarter of 2010.
Moreover, with the exception of luxury real estate in Limassol, property prices in Cyprus have not grown at the same pace as in other markets in the eurozone.
“We estimate that the coming months will be characterized by widespread uncertainty, while the rise in the cost of basic goods will continue to put pressure on the purchasing power of consumers, who will be very cautious in their decisions, especially in terms of making high-value purchases. shopping,” Kineiro said.
He also explained that the market already has a large stock of second-hand property, the number of which is steadily growing.
In addition, he stated that due to the intense competition among real estate sellers, there are still opportunities for both the acquisition of a main residence and the acquisition of a second home for investment purposes.
“The real estate market has shown high resilience both during the pandemic and in this new period of uncertainty,” Kineiro said.
“We are optimistic that he will do it again without any side effects,” he concluded.