Significant surge in Cyprus real estate market amid soaring demand
07:43 - 02 August 2023
The real estate market in Cyprus recorded a noteworthy upswing during the first quarter of 2023, with prices continuing to rise, particularly in the apartment sector, primarily driven by increased demand.
According to data published by the Central Bank of Cyprus (CBC), the Residential Property Price Index (RPPI) exhibited a significant acceleration compared to previous quarters.
Indicators for property sales and demand in the first quarter of 2023 confirm the surge in housing demand. Figures from the Department of Land and Surveys report a substantial year-on-year increase in residential property demand.
Foreign buyers accounted for the most substantial annual growth during the period under review, representing approximately half of the total buyers in 2022 and the first quarter of 2023.
Simultaneously, the rate of construction cost escalation seems to be stabilizing compared to the 2021-2022 period, which saw remarkably high growth rates.
The annual increase in the RPPI in the districts of Limassol and Larnaca is showing acceleration, while in the Paphos district, despite a slowing trajectory, the percentage of residential property price growth remains high.
Even with the rise in the European Central Bank's (ECB) key interest rates and the consequent decrease in demand for housing loans in the first quarter of 2023, the domestic property demand seems to have been only minimally affected, as it continues to record growth.
Residential property prices up 7.7% y-o-y
The RPPI for houses and apartments during the first quarter of 2023 recorded a quarterly rise of 2.1%, compared to 1.6% in the previous quarter. The increase in the RPPI stems from a 2.3% increase in apartment prices and a 1.7% increase in house prices compared to the preceding quarter.
On an annual basis, there is also a surge in residential property prices by 7.7% in the first quarter of 2023, compared to 6.6% in the fourth quarter of 2022. Apartment prices during the examined quarter registered an annual growth of 8.4%, while house prices rose by 6.6%.
Larger increases in Limassol, Larnaca, and Paphos
During the first quarter of 2023, residential property prices saw quarterly growth in all districts. Specifically, Nicosia recorded a 1.3% increase, Limassol 2.9%, Larnaca 2.6%, Paphos 0.3%, and Famagusta 2.3%.
As for the annual changes in property price indices by district, there were increases in all district for the sixth consecutive quarter. Specifically, Nicosia's property prices rose by 4.3%, Limassol by 10.6%, Larnaca by 7.7%, Paphos by 6.8%, and Famagusta by 4%.
On a quarterly basis, house prices showed increases in all districts except for Paphos. Specifically, Nicosia's house prices rose by 1.3%, Limassol by 2.8%, Larnaca by 2.2%, Famagusta by 2.9%, while Paphos experienced a decline of 1.1%. On an annual basis, house prices saw growth in all districts. Specifically, house prices in Nicosia, Limassol, Larnaca, Paphos, and Famagusta increased by 4.2%, 9.4%, 5.8%, 5.7%, and 5%, respectively.
As for apartment prices on a quarterly basis, an increase was recorded in all districts. Specifically, Nicosia's apartment prices rose by 1.4%, in Limassol by 2.4%, Larnaca by 3.5%, Paphos by 4.3%, and Famagusta by 1.2%. On an annual basis, apartment prices witnessed growth in all districts for the seventh consecutive quarter. Specifically, in the first quarter of 2023, Nicosia's apartment prices increased by 4.4%, Limassol by 10.4%, Larnaca by 12.3%, Paphos by 10.3%, and Famagusta by 2.4%, compared to the corresponding quarter in 2022.
Properties sold to foreign buyers increase by 33.6%
According to the latest data from the Department of Land and Surveys (DLS), the number of property sales documents continued to rise by 18.8% on an annual basis, reaching 3,574 sales compared to 3,009 in the corresponding period last year. This reflects the increased demand for properties.
During the examined quarter, there was a significant increase of 33.6% on an annual basis in the number of properties sold to foreign buyers (1,706 compared to 1,277), primarily from countries outside the EU. Additionally, the number of properties sold to domestic buyers also rose by 7.9% on an annual basis (1,868 compared to 1,732).
This surge in sales documents to foreign buyers is mainly attributed to the "headquartering policy," which attracts foreign professionals from countries such as Russia, Israel, Ukraine, the United Kingdom, Lebanon, and Belarus.
The restrained supply of new properties is reflected in the production index for constructions (building category) by the Statistical Service of Cyprus. After six consecutive quarters of annual declines, this index recorded a 5.5% increase in the first quarter of 2023.