REAL ESTATE MARKET TRENDS

Potential buyers become more careful and take longer to make decisions.

We have seen several borrowers change their spending plans in reaction to the rise in interest rates. Additionally, shoppers are making more thoughtful and thought-out choices these days. This indicates that it will take estate agents and other property experts longer to help consumers discover their dream house.

Low lending and high interest rates.

Based to the Central Bank of Cyprus, fresh loans in Cyprus significantly decreased in April 2023. From 922.5 million euros in March 2023, new loans dropped to 473.9 million euros in March 2023. Consumer loans, loans for the purchase of homes, and mortgages to non-financial firms were all impacted by this downturn. Cyprus has some of the most elevated lending rates in the Eurozone, according to the latest ECB data.

The resale property supply will expand.

Property sellers are anticipated to market their homes, increasing the supply of available properties for sale as a result of anticipated rises in non-performing loans. Particularly those who bought houses as investments can find themselves in a predicament where they must decide whether to continue making loan payments or whether selling their property would be a better course of action.

Additionally, it is anticipated that the GDP would somewhat contract, placing additional strain on the labor market and, ultimately, raising the likelihood of job losses or, at minimum, creating some difficulties. This results in more reasons why the number of resale homes and the desire of current landowners to sell are anticipated to increase in 2023 and into 2024, in addition to the decline in household purchasing power. However, it is anticipated that the amount of resale homes from the funds will stay steady.

New home production is anticipated to increase.

Although fewer construction licenses and projects are planned, more homes and larger developments are likely to join the market.

The number of residential building permits overall decreased by almost 9% from January through May 2023 compared to the same time in 2022, according to the Cyprus Statistics Office. Yet they have grown in size/area (m2) by 3%, in total units by 3.5%, and in cost by about 18%. Current legal statements concerning decreased VAT regulations that enforce size (and value) constraints can be blamed for the current pattern of growing size and unit sales. Therefore, to guarantee that the new regulations won't have an impact on their anticipated medium-term tasks, developers have hurried to get legitimate construction licenses. Rising building expenses are another factor contributing to a boost in value. Overall, it is anticipated that 4,135 additional residential units will join the market in Cyprus over the next few years based only on data from licenses obtained between January and May 2023. 

The aforementioned patterns suggest that price stability is now taking place. It is anticipated that this will be followed by selling pressure, which will cause nominal prices to drop slightly. However, it is important to remember how the values of assets will surely decline if expansion continues at high rates and price levels stay unchanged for a lengthy period. This example seems to be the most probable one.

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REAL ESTATE MARKET TRENDS

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REAL ESTATE MARKET TRENDS

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REAL ESTATE MARKET TRENDS
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