ECONOMY

Cyprus homes up by 20 pct

NICOSIA – Cyprus house prices rose nearly 20 percent last year despite central bank efforts to curb them, but analysts expect the pace of growth to slacken in 2008. The BuySell price tracker said yesterday that the year-on-year rate of house price increases eased to 19.2 percent in December from 21 percent in November. In monthly terms, prices fell in December for the first time in 2007, registering a decrease of 1.9 percent versus a 2.5 percent increase in November. However, the year-on-year rate was nearly three times higher than the 6.6 percent increase during 2006. The average price of a house was 108,344 Cyprus pounds ($275,731) last month. Cyprus’s central bank imposed curbs on mortgages in mid-2007, expressing concern that rampant credit expansion was feeding into house prices. But house price inflation raced ahead in the second half of the year, up from a 9.7 percent annual rate in July, partly due to the prospect of lower interest rates once Cyprus joined the eurozone on January 1 and speculation about the imposition of value-added tax on sales of land plots. Analysts said they expected a slower pace of house price increases this year. Yiannis Telonis of Hellenic Bank said: «It seems we have a slowdown in the market but not to such a significant extent… Personally, I believe we will have a cooling effect this year.» Economist Costas Apostolides of EMS Economic Management Services also expected lower demand for housing this year. «The long-term average price increase ranges between 8 and 10 percent. But there are factors that cannot be predicted like the international (financial) crisis that could affect purchases by UK citizens, restrictions imposed by the (Cyprus) central bank and ECB (European Central Bank) interest rates,» he said.