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Cyprus

Home prices unchanged in Q4, Central Bank says

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Home prices remained unchanged in the fourth quarter of 2015 compared to the previous quarter for the first time since 2010 as a quarterly increase in house prices offset a decline in flat prices, the Central Bank of Cyprus said.

House prices rose in October to December 0.5 per cent compared to the third quarter while apartments became 1.6 per cent more affordable, the central bank said in a statement on its website. Home prices fell in the third quarter a quarterly 0.3 per cent after falling another 0.4 per cent in the second quarter.

Home prices rose 2.4 per cent in the Famagusta area in October to December compared to July to September and 0.4 per cent in Paphos. They remained unchanged in Limassol, fell marginally in Larnaca and 0.5 per cent in Nicosia.

House prices remained unchanged in Nicosia in the fourth quarter compared to the third and rose in all other districts with the highest increases seen in Famagusta and Paphos where they rose 2 per cent and 1.4 per cent respectively. Apartment prices rose 3.6 per cent in Famagusta and fell in all other districts. In Nicosia and Larnaca flats lost 1.6 per cent of their value while in Limassol and Paphos losses were more contained.

In the fourth quarter of 2015, home prices fell an annual 1.8 per cent after falling an annual 3.7 per cent and 5 per cent in the third and second quarter respectively. The most extensive drop in home prices was the 3.3 per cent reported in Nicosia, followed by Larnaca’s 1.8 per cent, Limassol’s 1.6 per cent and Paphos’s 1.2 per cent. Home prices in Famagusta rose 1.5 per cent.

“The economy continues to shows signs of recovery with gross domestic product recording positive growth rates,” the Central Bank of Cyprus said. “Improved domestic economic and financial conditions are expected to have a positive impact on the real estate sector”.

The central bank said that an increase in property demand is reflected in the 19 per cent annual increase in property transactions in the fourth quarter, with the number of foreign property buyers rising as much as 25 per cent.

“The increased demand is supported by various favourable financial factors,” including the drop of mortgage rates to an average of 3.34 per cent in the fourth quarter of 2015 compared to 4.39 per cent in the respective quarter of 2014, the central bank said.

“In the fourth quarter 2015, there was an increase in demand for mortgages by households and is expected to further increase in the first quarter of 2016,” the supervisory authority said. “Mortgage standards remained unchanged and are expected to remain unchanged in the first quarter of 2016 in while demand for loans increased”.

According to the central bank’s data series which stretch from 2006 to 2015, the current house price level is comparable to that of the first year. Prices for apartments fell already below the 2006 level.

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