27.01.2024
The Cyprus property market is preparing for a challenging year, which will be impacted by both natural price declines caused by market factors and supply chain disruptions due to geopolitical conflicts. This opinion was expressed by the President of the Cyprus Council for the Registration of Real Estate Agents Marinos Kineiro .
In a recently published analysis report , Quineiro noted that 2023 is expected to be difficult due to many problems that stretch back to 2022. Moreover, high inflation led to significant interest rate hikes by the European Central Bank (ECB) throughout 2023, causing borrowing costs to rise continuously until October, when rate hikes were suspended. At the same time, the cost of building materials remained high compared to pre-pandemic levels.
According to the Department of Lands and Research, which is regularly processed and presented quarterly by the Estate Agents Registration Board, in the first nine months of 2023, 8,681 transfers of ownership were recorded worth €1.4 billion and 9,374 sales contracts totaling 3. 3 billion euros. However, in the fourth and final quarter of 2023, the board expects to see numbers reflecting a downturn in the market.
“In our opinion, the main factor influencing demand, both from local and international buyers, is rising property prices,” said Quineiro . He also noted that prices of properties for sale or rent are determined not by real estate agents, but by property owners.
“Rising costs of living, high property prices and increased borrowing costs often lead banks to consider young couples seeking property loans to be financially unstable,” he added.
Additionally, Quineiro reiterated that “we have previously warned both the current and past governments that as house prices rise, more people will turn to renting, exacerbating the problem.” He explained that this problem is exacerbated by a new trend of property owners opting for short-term rentals.
“Unfortunately, we are currently seeing what we predicted: rental prices are reaching levels that require even a monthly salary for housing,” he said.
Meanwhile, the council president explained that under normal circumstances, the council expects market forces to come into play in 2024, leading to some reduction in house and apartment prices, primarily through offers and rebates. “Property owners have already taken some steps in this direction to try to stimulate buyer interest and sell their properties,” he said.
Uncertainty looms in 2024 given the ongoing conflict in Ukraine and recent events in the Gaza Strip. Concerns continue to grow as reports and statements rule out the possibility of the war spreading to Lebanon. At the same time, the supply chain is being impacted by Houthi attacks in Yemen, disrupting the smooth operation of the Suez Canal.
“It is clear that the consequences of the sharp reduction in ship transit through the Suez Canal will soon be felt in the Cypriot economy, especially in the property market. Potential increases in the prices of raw materials and construction materials are likely to keep property prices, especially newly built properties, at elevated levels,” he concluded.
