The fact that so much of Europe’s attention has been focused on Brexit and also events in some of the larger member states has meant that developments in some of the smaller member states, like Cyprus, have largely gone overlooked.
On the one hand, this is something of a pity, since everyone can generally use some good news. On the other hand, it presents opportunities for quicker-moving investors to get in at this early sweet spot when the trend towards recovery is clearly established but still below the mainstream radar.
The Cypriot economy continues to improve
Back in 2013, Cyprus made international headlines with its now-infamous raid on savings accounts. At the time it prompted all sorts of caustic comments about the fact that Cyprus had been allowed to join the EU in the first place and was widely portrayed as a sign of fiscal irresponsibility on the part of the Cypriot government.
It might be a bit much to say ‘fast forward to today’ since the last five years have involved slow and painful, but fairly steady, progress. However, half a decade has passed since the bank raid and the Cypriot economy is now clearly moving in the right direction as evidenced by growing GDP and, crucially, falling unemployment.
The housing market is clearly picking up
There are basically two factors which, taken together, indicate the health (or otherwise) of any given housing market. One is prices achieved (for sales or for rentals) and the other is transaction volume. Both have been improving and are now clearly trending positively.
Data from the second quarter of 2018 shows a year-on-year increase in the price of both houses and flats (4.8% and 7.6%) respectively. Famagusta and Larnaca jointly led the way with the latter having strong markets for both residential and holiday property.
Commercial property (offices, retail and warehouses) also increased in value, which correlates with the drop in unemployment. Unsurprisingly, rental values are also up across Cyprus as a whole (although with regional variations) and across all sectors.
Transaction volumes are also trending upwards, as the Cyprus banking system wins back the confidence of investors and private buyers, a process which is helped by the fact that it is now rather less challenging for international buyers to get financing for house purchases.
The longer-term outlook
While Cyprus, like other EU member states, is unlikely to be thrilled about Brexit, the reality is that it is unlikely to have much of an impact, if any, on the Cypriot economy in general or on its property market in particular.
First of all, people from the UK are still going to want to head to Cyprus on holiday and hence buy holiday homes because its attractions are just the same as they have always been. Secondly, for similar reasons, people from the UK are still likely to want to retire to Cyprus and thirdly because the demand for property in Cyprus extends far beyond the UK.
*For more information on property investment or to browse a range of buy to let property for sale, please contact Hopwood House.