The housing price index (HPI) was up 1.8 per cent in the first quarter of this year, according to the Central Bank figures released on Wednesday.
It was a smaller rise than in the last two quarters of 2019, when it rose by 2.8 per cent in the third and 2.2 per cent in the fourth, indicating a small downward trend.
The Central Bank report said the modest rise of the HPI “owed to the decrease in demand for properties both by foreign investors and Cypriot buyers.” Since the middle of last year there had been some downward pressure on prices, “primarily because of the stricter criteria of the Cyprus Investment Programme,” explained the Central Bank.
The problem was compounded by the consequences of Covid-19, “which made the climate of uncertainty even stronger.” The effects of the pandemic on the housing market will be more evident in the second quarter of 2020, for more than half of which the economy was in lockdown.
Indicative of the uncertainty in the market, which was expected to increase, were the fluctuations in different indices. For example, experts participating in research of economic trends expected a fall in property prices for the months of April, May and June, said the Central Bank’s quarterly report.
The increase in house prices in the first quarter of 2020 was 0.8 per cent, lagging behind apartment prices, which were up 4.6 per cent. Apartments are usually situated in the centre of towns, which made them more resistant to pressure on prices, the report said.
The only district in which the HPI had declined in the first quarter of this year was Limassol. It was down by 0.3 per cent, although this was understandable considering that from the start of 2017 until June 2019 the HPI for Limassol had been higher than all other districts.
There were also fewer property sales in the first two months of 2020. According to the Lands and Surveys Department in January-February 2020 there was a reduction in property sales of 7.5 per cent in stark contrast to the same two months of 2019, when transactions recorded an increase of 17.6 per cent.
Demand for properties by foreign investors fell by 10.9 per cent and by locals by 4.4 per cent in the first quarter of the year. While demand for properties has been affected by the outbreak of the pandemic, the decline had begun before the appearance of the Covid-19 said the Central Bank.