2023 Doing Business in Cyprus (UK Edition)

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DOING BUSINESS C YPRUS 54 UNITED KINGDOM EDITION PROPERTY PRICE INDICATORS SHOW INCREASE IN PRICES Given the strength of sales and the rising construction prices, it is not surprising that the various residential property price indices point to rising prices, even though the degree of increase differs depending on the index. The index prepared by the Statistical Service, Cystat, which is based on actual sales, reports an increase in prices of 5.9% in the first quarter of 2023 and 3.1% in the second. The Central Bank of Cyprus index, which is based on a larger sample of valuations, reports a year-on-year increase in prices of 7.7% in the first quarter of 2023 and 7.4% in the second. This is the fastest pace of growth since 2008 according to the Central Bank index. Apartment prices measured by the Central Bank index are clearly rising faster than those of houses. In the second quarter of 2023 they rose by 10.1% compared with an increase of 5.6% for houses in the same quarter. This probably also underlines the importance of the local residential market in property purchases, especially after the withdrawal of the Cyprus Investment Programme in 2020. The Central Bank index shows a fairly large discrepancy by district, however. While apartment prices in Paphos rose by 16.3% in the second quarter of 2023, thanks to strong sales, apartment prices in Nicosia increased by a more modest 4.2% and in Famagusta by 2.5%. All residential property PROPERTY PRICE INDICATORS % change over the same period of the previous year 2022 Q2 2022 Q3 2022 Q4 2023 Q1 2023 Q2 Cystat 2.1 5.3 4.4 5.9 3.1 Central Bank of Cyprus 4.7 6.3 6.6 7.7 7.4 Houses Central Bank of Cyprus 3.5 5.2 5.6 6.6 5.6 Ask Wire -0.8 1.4 1.0 3.1 4.6 Apartments Central Bank of Cyprus 7.0 8.0 7.7 8.4 10.1 Ask Wire 6.3 9.4 9.9 12.3 12.2 Other Ask Wire holiday houses -1.9 0.4 0.9 3.1 3.7 Land Registry: average unit 8.4 32.2 3.9 3.8 16.8 value of transfers (a) (a) Parcels may vary in size; Sapienta Economics calculations. Sources: Cystat; Central Bank of Cyprus; Ask Wire; Department of Lands and Surveys. © Sapienta Economics Ltd.
DOING BUSINESS C YPRUS 55 UNITED KINGDOM EDITION PROPERTY-PRICE INDICES There are three regular property-price indices produced in Cyprus and one which Sapienta Economics calculates from parcel transfers. u The Cystat index is hedonic (adjusted for changes in quality) and is based on actual sales. The Cystat index does not give a breakdown by region or by property type. u The Central Bank of Cyprus index is also hedonic but is based on bank valuations, as opposed to current sales, although recent sales are also considered in valuations. The Central Bank of Cyprus index gives a breakdown by region and by property type (apartments and houses). u The Ask WiRE index, which is a fairly new index largely based on actual sales prices but also adjusted to consider ‘thin trading and an inherent lag in price recording’ in Cyprus. It gives a breakdown by region and property type, including commercial property (retail, warehouses and offices). It also distinguishes between residential and holiday houses/apartments. u Sapienta Economics also uses data from the Department of Lands and Surveys (Land Registry) to calculate the average price per unit of parcel transfers. This is not a market price, as it will include, for example, debt-for-property swaps by banks, and parcels may also vary in size. However, it can be an indicator of forced acquisitions. The three public indices give different results because of their different focus. Out of the three the Central Bank probably lags the most, as property valuations tend to be made on the basis of sales in the previous period. However, it has the advantage of being based on a larger data set than the Cystat index, especially in periods when sales are stagnant.
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