The upward trend in housing prices, primarily driven by increases in apartment prices, persisted during the fourth quarter of 2023, according to a report published by the Central Bank of Cyprus on Tuesday.

Based on the findings of the report, housing prices continued to rise despite a slight decrease in demand, as reflected in comparative sales data from the department of lands and surveys.

The increase in mortgage interest rates significantly affected the demand for new housing loans. Also, demand from foreign buyers and construction material prices stabilised, leading to more moderate short-term increases in the Housing Price Index (HPI).

According to the department of lands and surveys, the total number of sale deeds submitted to district offices, covering all types of properties, recorded a slowing increase on an annual basis during the fourth quarter of 2023.

The increase in overall property demand came from domestic buyers, while a decrease was observed in the number of sale deeds submitted by foreign buyers.

On the demand side, the total value and number of transactions of residential properties – including houses and apartments – in 2023 experienced a slight decrease compared to 2022. This was influenced by the continuous increase in mortgage interest rates, which was recorded during the fourth quarter of 2023, as well as the decrease in the approval of new housing loans in 2023 compared to 2022.

Furthermore, there was relatively greater demand for apartments compared to houses, stemming from buyers’ preference for smaller properties, as reflected in the reduced square metres per residential unit for which building permits were issued.

On the supply side, according to market factors, it remained limited compared to the high levels of demand, a significant factor contributing to the increase in the HPI.

However, the increase in the number of residential units for which building permits were issued in 2023, combined with the fact that there was already a significant number of construction projects underway, is expected to increase the supply of residential properties in the medium term for the upcoming period, which, in turn, is expected to alleviate the pressures for price increases.

Meanwhile, the HPI during the fourth quarter of 2023 recorded a 2.3 per cent increase, similar to the 2.2 per cent rent recorded in the previous quarter.

The slight rise in the HPI, nevertheless, resulted from a 1.8 per cent increase in house prices and a 3.2 per cent increase in apartment prices.

On an annual basis, there was an 8.3 per cent increase in housing prices during the fourth quarter of 2023, compared to 7.6 per cent in the previous quarter. Apartment prices increased by 12.7 per cent and house prices by 5.7 per cent.

Quarterly housing prices across all provinces saw an increase for the fourth consecutive quarter during the last quarter of 2023. Specifically, the Nicosia district witnessed a 1.5 per cent increase, Limassol 3 per cent, Larnaca 2.5 per cent, Paphos 2.7 per cent, and Famagusta 2.1 per cent.

Regarding annual changes in Property Price Indices (PPI) by province, increases were recorded across the board. Nicosia saw a rise of 5.1 per cent, Limassol 10.7 per cent, Larnaca 11 per cent, Paphos 8.3 per cent, and Famagusta 9.5 per cent.

Quarterly house prices exhibited increases in all provinces, with Nicosia rising by 1.5 per cent, Limassol by 2.5 per cent, Larnaca by 1.2 per cent, Paphos by 1.7 per cent, and Famagusta by 1.4 per cent.