Real estate stakeholders are concerned about the near-term outlook for the construction sector and are warning not to be fooled by the uptrend in property sales as the war in Ukraine will hurt the industry.
Real estate sales grew by 40.1% in the first four months of 2022 compared to the same period last year, according to data released by the Land Registry Office.
Even more encouraging, compared to pre-pandemic levels in 2019, a 15.3% increase was recorded from January to April.
However, the data suggests a slowdown in the real estate market. Sales filings increased 13% in April compared to 33% in March, 63% in February and 67% in January.
Bank of Cyprus Financial Research Director Ioannis Tirkides said: “We are currently seeing an upswing cycle starting in April 2020 thanks to a supportive fiscal framework to combat the pandemic and low interest rates.”
The government extended the interest rate subsidy scheme for residential and corporate loans until the end of 2021 and raised the ceiling for eligible loans. However, the scheme has come to an end.
The scheme provided for a subsidized interest rate of 1.5% for four years.
Tirkides said that the uptrend before April is likely to stop due to rising commodity prices as a result of the war in Ukraine.
“But we can’t draw that conclusion based on the available data.”
Head of Analytics at Delfi at Delfi Partners & Company Zafeiria Statogiannakou said that the Cypriot real estate market is moving at a pre-crisis pace.
“This upward trend proves the resilience of the Cyprus property market, despite the socio-economic consequences of the pandemic and the prolonged geopolitical tensions in Ukraine,” Statoyannakov said.
However, she noted that due to the close relationship of Cyprus with Russia and Ukraine in the field of tourism and investment, there is a risk that the current positive trend in the property market could change.
“The duration of hostilities will be of key importance on both a humanitarian and an economic level.”