A slight slowdown in the downward trend of residential property prices observed during the first quarter of 2012. Specifically, for the price index of dwellings (houses and apartments) the Central Bank recorded a quarterly fall of 1% in the first quarter of 2012 compared with 1.8% quarterly decline in the fourth quarter of 2011. The respective quarterly change in the prices of houses and apartments was -1.1% compared to -1.9% and -0.6% compared to -1.9% respectively.
The slight slowdown in the rate of reduction in prices is due largely to the implementation of new legislative measures were designed to directly stimulate the housing market. For example, there were significant reductions (in some cases elimination) of transfer fees and value added tax (VAT) paid to purchase a primary residence for purposes of home ownership. However, these measures failed to reverse the downward spiral of house prices, says the Central Bank.
The aforementioned slowdown in price reduction was observed by district and house price index excluding those of Paphos and Famagusta, where prices showed a bigger quarterly decrease from the previous quarter (3.1% compared with 2.4% and 2.6% from 1.8%, respectively).
Famagusta also showed the greatest reduction in the prices of apartments (2.7%), while the Paphos district recorded the biggest drop in housing prices (3.5%). In contrast, the Limassol district recorded a marginal increase in the prices of apartments (0.2%), while the Nicosia district recorded the smallest decline in the prices of houses along the Famagusta district (0.5%).
On an annual basis, house prices fell by 4.9% (4.3% drop in the prices of apartments and 5.4% drop in the prices of houses). The biggest annual fall in house prices presented by the Paphos district (10.6%), while the smaller the Nicosia district (3.2%). Paphos and recorded the largest annual decline in prices both apartments (10.2%) and prices of homes (9.6%). Smaller annual reductions in the departments presented the Limassol district (3.1%) and houses the Nicosia district (3.1%).
These developments in property prices were reflected in the number of transactions that occurred during the first quarter of 2012. According to data from the Department of Lands and Surveys, the number of deeds of sale filed in the first quarter of 2012 was increased by 5.9% compared to last year tov. The positive trend in the number of deeds of sale in the first quarter of 2012 was the first since the third quarter of 2010. It is worth noting that the annual increase in trade transactions attributed to home buyers (17.3%), while transactions involving the foreign market continued downward spiral in a yearly decrease of 25.5%.
