State of the market
Prices of residential apartments fell by an average of 11.2% during 2010. The areas popular with overseas investors and local summer home buyers experienced the worst of the falls; prices in Paralimni/Famagusta slumped 23.2%, those in Larnaca dropped by 14.4% and those in Paphos fell by 10.2% over the year.
Prices in the port town of Limassol fell by 6.6%, while those in the capital Nicosia fell by just 2.4% over the year.
House prices in residential areas fell by an average of 7.4%. The worst hit area was Larnaca, where prices fell by 13.2%, followed by Limassol (-10.0%), Paphos (-7.2%), Paralimni/Famagusta (-5.1%) and finally Nicosia, where house prices fell by just 2.3% over the year.
During the peak year of 2007, overseas investors bought 11,281 properties. But by 2009, this number had fallen by 84% to a mere 1,761. There was a marginal improvement in 2010, when overseas investors purchased 2,030 properties, and 2011 seems to be on course to achieve a similar number of sales.
Sales to local buyers have fallen sharply due to the continuing uncertainties about the Cypriot economy. Unemployment levels reached an unprecedented 7.6% in June 2011 up from 6.5% in June 2010 - one of the highest increases in the EU.
The latest independent assessment of the market carried out by RICS Cyprus (The Royal Institute of Chartered Surveyors) and published in July 2011, shows that rental yields remain poor. These suggest that there is still room for rebalancing to take place.
Initial (or gross) yields, as shown in the chart below, is the total yearly gross rent divided by the price, expressed as a percentage.