15.11.2022
Rising interest rates have not affected property prices as high construction costs and healthy demand from investors looking for alternatives to low returns on savings keep prices afloat.
It is expected that interest rates will determine the value of real estate in the future, as an increase in the cost of a loan may deter the interest of buyers.
Until the summer, the key rate was negative; there have already been three hikes to 2%, while the European Central Bank is expected to raise rates even higher during its Board of Governors meeting on 15 December.
According to ECB analysts, this will make access to credit more difficult, since borrowing will be much more expensive.
“Mortgage interest rates rose significantly in the first half of this year, which could particularly affect home prices and real estate investment,” say European Central Bank researchers.
“In particular, at a time when the ECB is raising interest rates, the models suggest that a one percentage point increase in mortgage rates could lead to prices falling by about 9% in two years,” the researchers note.
However, housing prices are still high.
A 93 sqm apartment in Kaymakli (Nicosia) is for sale for €160,000 and a 130 sqm apartment for €280,000.
An apartment of 72 sq. m in the more prestigious Strovolos Nicosia is sold for €145,000, an apartment of 85 sq. m in the same area is sold for €220,000, and an apartment of 100 sq. m in Engomi is sold for €340,000.
The Phileleftheros data refer to old apartments, not new buildings.
Housing prices have not yet come down. For example, a mansion with an area of 240 sq. m in Strovolos costs 375,000 euros, and a house of 233 sq. m in Lakatamia is sold for 395,000 euros.
In Limassol, a new apartment of 115 sq. m in Agios Tychonas on the outskirts of the city is sold for €470,000, while in the center an apartment of 97 sq. m costs €240,000, and an apartment of 112 sq. million
Buying a new home in the center of Limassol is only available to wealthy clients, as the cheapest home costs 700,000 euros, with most of them over 1 million euros.
