It is the second quarter of the year 2012 and the Royal Institute of Chartered Surveyors' index reports that there is a drastic fall in rentals and prices of homes in major districts of Cyprus.
The half yearly report says that the price for a two bedroom apartment in Nicosia has gone down to €535(June) from €555(March). During the same period, the rentals in Limassol landed on €479 from €502.
So, in less than a quarter the average cost price for a two bedroom apartment in Cyprus took a slide of €2,631 by falling to €128,484(June)from €131,120(March).
Pavlos Loizou, working with the RICS had the view that the prices are falling. According to him, "The country's bankrupt and so are the banks. It's as simple as that." He added that around 83% of the population in Cyprus has their own property, so, there's not much demand in the market. For the rest of the population that is reeling under unemployment of around 11%, are hardly in a position to buy.
Speaking of the situation that prevailed in the second half of the year 2011, the prices have dropped significantly, where the figure for houses has gone down by 6.4%, it is 10.2% for apartments, it stands at 10.8% in retail and 9.0% in offices sector, with registering a fall of 12.0% for warehouses.
Most investors in Cyprus are not trying to burn their fingers at this point of time and are not making any moves in the real estate market. The condition is typically volatile and people prefer to wait and watch. According to government sources, Cyprus is to borrow funds from its EU partners in lieu of restructuring its economy for growth prospects.
Property developers are in no position of predicting the profits out of their investments and there is no surety with the rentals from Cyprus property either.
On the question of what is going to take place in near future? Mr. Loizou elucidated that places like Famagusta and Paphos have experienced price fall for quite some time. While for Limassol and Nicosia, it's a recent development, so, it looks like it is going down at an alarming rate. Chances are that Nicosia's reliance on state funds will make it suffer badly. Though, he also added by saying that this sudden symptom of price fall is a sign that the market is going to revive soon.
Loizou continued adding that in the period between the years 2004 and 2008, there was stability because of the rising prices of homes. It was an exciting phase and encouraging too. So, now probably the market is melting down to settle at an average.
Furthermore, he believed that with the rent prices falling investors will soon be in position to know the results of their investment, which will be a sign that the businesses are going to pay back their rents. But it would still take more than a year's time.
Things though cannot be generalized at the moment and people would have to keep an eye on the index, which mirrors the market. So, till the time things stabilize, the investors will hold the ground and not make any decisions. The prices in the mean time are going to plunge more.