Cyprus real estate prices rise

Cyprus's real estate industry is growing rapidly as a result of the property sector's notable recovery in the third quarter of 2023, which is being driven by high demand from both local and international buyers.

The Central Bank of Cyprus (CBC) has released new data that shows an outstanding increase in housing prices, particularly for apartments, while the real estate market continues to perform strongly.

A steady increasing trend is shown in the Residential Property Price Index (RPPI) of the CBC, which shows gains on a quarterly and annual basis. The RPPI for houses and apartments increased by 2.2% in the third quarter of 2023, outpacing the 1.5% increase seen in the prior quarter. The growth is linked to a 1.4% rise in housing prices and a noteworthy 3.6% increase in apartment prices.

On an annual basis, the overall property prices exhibited a strong 7.6% increase during the same period. Apartments took the lead with an impressive 11.5% increase, while house prices also saw a respectable rise of 4.9%.

All districts saw quarterly rise in housing prices for the third consecutive quarter, indicating a consistent rising trend in property values. With the largest quarterly rise of 2.9%, Limassol appeared as the market leader, closely followed by Nicosia (0.7%), Larnaca (2.8%), Paphos (2.4%), and Famagusta (2.8%).

Each district had a rise in the RPPI on an annual basis, with Limassol topping the list at 10.1%, followed by Larnaca (10.5%), Paphos (7.6%), Famagusta (6.4%), and Nicosia (3.9%).

Prices for houses and apartments increased at comparatively greater rates in coastal areas on a quarterly and annual basis, most likely as a result of increased demand from overseas buyers. The increase in demand may be ascribed to both international and local investors, particularly those who are looking into buy-to-let opportunities within the 'headquartering' policy framework.

According to the CBC, foreign as well as local investors are driving up demand by taking advantage of incentive schemes like the headquartering and management relocation policy. The market's limited availability of new properties contributed to the RPPI's increase in the third quarter of 2023.

In the third quarter of 2023, there was a notable 14.4% yearly rise in property sales, according to data from the Department of Lands and Surveys, suggesting an increasing demand for real estate. Domestic purchases had a remarkable 15% growth during the same time, while purchases by foreign buyers increased by 13.7% yearly.

The issuing of building permits for residential structures decreased from January to August 2023 compared to the same period in 2022, indicating a discernible reduction in construction activity despite the increased demand. Analysts attribute this tendency to rising borrowing and building expenses.