Housing prices continue on upward path

Cyprus housing market prices continued on an upward path in the third quarter of 2023, with apartments recording the highest increase.

The Central Bank of Cyprus (CBC) forecasted consistent growth on both annual and quarterly bases, reflecting increased demand from both local and foreign buyers.

The Department of Lands and Surveys (DLS) reported a year-on-year increase in real estate transactions during the same period. Many domestic buyers were opting for buy-to-let arrangements, while increased demand by foreigners was related to the government’s headquartering policy, aimed at attracting foreign businesses to the island.

From January to August 2023, fewer building permits were issued, compared to the same period of the previous year, and this was attributed by the central bank to the steep rise in constructions costs as well as the higher interest rates. Despite this, the demand for new housing remained high.

As a result of the high demand and the restricted supply, the Housing Price Index (HPI) rose by 2.2 per cent in Q3 of 2023, compared to the 1.5 per cent in the previous quarter. This increase, compared to the second quarter was accounted for by a 1.4 per cent rise in house prices and a more substantial 3.6 per cent increase in apartment prices. On an annual basis, housing prices grew by 7.6 per cent in the third quarter of the year, with apartment prices up by 11.5 per cent and houses by 4.9 per cent.

The HPI increased in all districts, with Limassol recording the highest (2.9 per cent) and Nicosia the lowest (0.7 per cent) in Q3. Larnaca and the Famagusta districts recorded increases of 2.8 per cent and Paphos 2.4 per cent.

On an annual basis, the highest increase in house prices was in Famagusta district (9.5 per cent). It was the only district which did not see an increase in apartment prices on an annual basis – apartment prices recorded a 1.7 per cent decrease.

According to DLS records, sales contracts increased 14.4 per cent on an annual basis in the third quarter of 2023 (3,830 compared to 3,347 in Q3 2022), reflecting the higher demand from both locals and foreigners. The number of properties bought by foreigners in Q3 increased by 13.7 per cent (from 1,506 in Q3 2022 to 1,712). Purchases by locals rose by 15 per cent (from 1,841 to 2,118)

The headquartering policy has been largely responsible for the high demand for properties by foreigners, who show a preference for homes in the coastal towns.