17 Jan Cyprus Residential Property: Increase of Domestic Demand
Cyprus Real Estate Market Report by the PwC confirms that Cyprus has enjoyed unpredictably striking economic growth along with boosting a strong fiscal performance, and only in the first half of 2018, the GDP rose to 3.6%. Cyprus has emerged as one of the increasingly growing economies in Europe, and Cyprus residential property sector is thriving on the increased demands from the domestic market.
Alongside attracting foreign investment, Cyprus has garnered great competitive housing projects to cater to the increasing surge of demand from its domestic buyers. In this article, we will break down all the reasons that are increasing demands for housing within the domestic market of Cyprus, for instance mortgage interest rates, household disposable incomes and ready access to finances.
A Low Inflation Environment
After emerging unscathed from a tumultuous economic crisis of 2012, Cyprus’ residential property sector has recovered due to the low inflation environment. This has increased the real disposable income of the citizens of Cyprus, a development that was first observed in 2017. 2018 has been a great year for homebuyers, especially first-time homebuyers as their income and savings continue to strengthen.
Booming Macro Economic Performance
The improvement in Cyprus’s macro-economic environment has been observed across all the various segments of economic markets and industry sectors, and it has facilitated the rise of household disposable income, which continues to rise and strengthen.
Surging Employment Market
The employment market has undergone a massive series of improvements and growth as compared to the employment market of 2012 and this has provided Cypriots with more financial security. Having a strong job that pays well also allows first-time homebuyers to qualify for the strict regulations and interest payments required by financiers and lending institutions.
Facilitating Mortgage & Interest Rates
Since 2012, economy policy makers have been striving to reduce the interest rates on housing loans to encourage Cypriots to invest in the residential property market. It appears that the strategy is working and the interest rates continue to fall. On 30th June, 2018, the interest rates on housing loans fell by a dramatic 2,96% and experts have revealed that when compared to last year, the reduction falls to a striking 20 bps.
Even though banks are still exercising rigid and cautious policies while providing mortgage loans to first-time homebuyers and new homeowners, the reduction in mortgage interest rates is driving the demand upwards. In addition, since the household credit sector is still heavily under debt, it is probably best for the banks to exercise a strict policy for new mortgage loans.
Given the fact that mortgage interest rates are constantly declining and household disposable income continues to increase, the fact that additional credit access for buying a new house remains low does not affect a Cypriot’s ability to invest in a new house. Cyprus banking sector has welcomed a variety of additional credit and mortgage loan facilities, which has led to a rise in the domestic demand for housing. Several new housing projects throughout the scenic expanse of Cyprus meet this demand.