House prices rise sharply in Cyprus

Article Date : 26 January 2006

The Cypriot economy has shown further signs of rapid growth and the housing market continues to lead the way.

Cyprus is expecting to join the EU in 2007/8, but prices have been steadily rising for some time. Looking at the obvious example of Spain, which joined the EU in 1986, experts predict that house prices will soar in the coming years and many property investors have already made significant investments on the island in anticipation of its accession.

Data from the Statistical Service CYSTAT shows that house prices are rising faster than any other consumer goods, with significant increases in the costs of water, electricity and gas all reflecting the current growth in the economy.

The Cyprus Financial Mirror reports that taxation has also led to higher prices, however, with alcoholic beverages shooting up by 9.4 per cent in 2005 in comparison to only 1.1 per cent in the previous year.

The increase in excise duties on "sin goods" was introduced specifically to prepare for EU accession and property investors are advised to make a move now in anticipation of similar increases in the next two years.

As detailed in the recent Passenger Survey, foreign visitors have also boosted the Cypriot economy following a 3.9 per cent increase in revenue from tourism against the figures from 2004.

Encouragingly, the Index of Economic Freedom by the Heritage Foundation has also pointed out that Cyprus has one of the freest economies in the world. This has particular significance for property investment in the country.

"The countries with the most economic freedom also have higher rates of long-term economic growth and are more prosperous than are those with less economic freedom," said the report.

Not only does this policy mean that Cyprus is well-positioned to flourish for many years to come, but property investors will also enjoy favourable property rights.

Policy on property rights is one of the key factors considered when compiling the Index of Economic Freedom and investors have been delighted by the country's continued commitment to fairness and independence in this field.

Experts agree that real estate prices are set for considerable gains following strong progress in 2005. An increase of 1.9 per cent in property prices during the third quarter of 2005 followed a 2.2 per cent rise in the second quarter.

The relative modesty of these figures has led to a huge influx of foreign property investors turning to Cyprus in preference to traditional hotspots such as Spain. With a general slowing of the property boom in Spain, EU accession and the promise of a well-managed economy makes Cyprus a genuine alternative this year.

Source: Assetz News

House prices rise sharply in Cyprus

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