Rental and property values continue to rise | Cyprus Gazette

Calls have been made for the government to intervene to support affected buyers and the property sector.

In light of the continued rise in property and rental prices in the first quarter of the year, there have been calls for the government to step in and ensure affordable housing is available for those at risk of being left behind. According to a report by real estate technology company Ask Wire, with prices for the first three months of 2023, property prices across Cyprus rose by 12.3% year-on-year for apartments and 3.1% for houses. In addition, office prices rose by 2.4%, holiday apartments by 8% and holiday homes by 3.1%. Only prices for stores and warehouses fell by 0.1% and 1.8% respectively. The increase in rental rates was even more significant.''many Cypriots, exacerbated by high inflation, which has eroded disposable income. Rental prices in Limassol have risen so much in the past few years that many Cypriots are now looking for accommodation in the surrounding villages.

Incited by what is happening, Cypriot real estate professionals have asked the government to intervene, even though the sector itself is benefiting from the situation. The real estate market has already begun to reflect the decline in Cypriots' purchasing power, said Marinos Kineiro, chairman of the Board of Registration of Realtors. "These factors, which we have warned about in the past, have eroded the purchasing power of households, essentially weakening the purchase of homes, be it an apartment or a house," he said. "At tho''At the same time, whatever form of regulation the government decides to reduce VAT to 5%, it will have an impact on demand for real estate in the near future and therefore on the purchase of mainstream housing,' he added. He believes that "targeted government intervention is necessary to both support citizens and the real estate sector. "

It is worth noting that there is no long-term government policy on housing. Apart from the refugee camps built after the Turkish aggression, social housing has never been part of government policy. Christos Nikolaou, CEO of real estate company Property Canvas, said that the migration processes of recent years and their lasting effects on the market are''are not temporary and require serious support from the government.

People who have recently moved to Cyprus to work for an online or fintech company "have invested their time and energy in adapting to the country and have also made significant investments in the local real estate market," he told the Cyprus Mail newspaper.

Nicolau said that rising rental prices have a direct impact on the sales market as foreign''Investors are looking to buy properties with yields of around 6%. "The amount of rent received for a property is a key factor in determining its value, as investors are willing to pay more for apartments that can be rented out at higher rates. For example, if an apartment can be rented for €1,000 per month, an investor is willing to pay up to €200,000 to buy it," Nicolaou said. "However, if the same apartment can only be rented for €500 per month, an investor is willing to pay no more than €100,000," he added. This highlights the close relationship between rental rates and sale prices in the real estate market, he said.

The CEO of Ask Wire, Pavlos Loisou, explained that historically Cyprus''housing. These include the construction of housing by the government itself or joint ventures with private companies, having rent-controlled housing to provide to tenants, the introduction of a buy-to-let program, and the sale of publicly owned social housing. "Ultimately, the government's role in housing delivery must be to ensure that safe, affordable and decent housing is available to all," he said. By working in partnership with private developers, housing associations and tenants, the government can provide a variety of options to meet the diverse needs of citizens, Loisu said. "This requires a long-term''A commitment to housing policy and investment in the development, management and maintenance of the housing stock,' he said.

Even in the absence of a housing policy, Nicolaou believes the government may need to introduce some measures to regulate the real estate market and prevent it from overheating. "Such measures could include imposing tighter restrictions on foreign investment or introducing incentives to encourage investment in other sectors of the economy," Nicolaou said. "However, if such measures are not applied, the real estate market in Cyprus is expected to remain stable and prices will continue to reflect demand from both domestic and international buyers," he concluded.

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