Real estate sales hit a 15-year high in the second quarter.

The Cyprus property market recorded a record number of sales in the second quarter of 2023, reaching levels not seen in the last 15 years, says a report by the Central Bank of Cyprus (CBK) released this week.

The prices of real estate, especially apartments, continue to rise, driven mainly by increased demand, which in turn is driven by foreign investor interest.

Analyzing the data, the CBK report notes that the CyprusHouse Price Index (HPI) rose by 1.5% in the second quarter of 2023, slightly less than the 2.1% increase in the previous quarter. This increase was mainly due to a 0.7% increase in house prices and a significant 3.1% increase in apartment prices. On an annualized basis, prices''on housing rose 7.4% in the second quarter of 2023, up from 7.7% in the first quarter, with apartment prices up 10.1% and home prices up 5.6%.

The majority of real estate transactions were by local buyers, but foreign investors saw the largest year-on-year increase in sales. Increased demand coupled with a limited supply of new housing appears to be the most significant factor contributing to the rise in property prices in the second quarter of 2023, notes the Central Bank of Cyprus. Furthermore, the report explains that the increase in foreign demand can be mainly attributed to head office policies that continue to encourage international companies to relocate to Cyprus, as well as the growing number of students and''other investors in the real estate market. At the same time, the increase in local demand appears to be driven mainly by investment purposes, including the purchase of rental properties.

In addition, the Central Bank of Cyprus said that until the second quarter of 2023, the increase in key European Central Bank interest rates and the subsequent decline in demand for housing loans do not appear to have significantly affected local demand for real estate, which continues to be on an upward trajectory.

In the second quarter of 2023, prices for''year, totaling 2,244 transactions, down from 1,903 in the second quarter of 2022.

Meanwhile, as a result of the European Central Bank raising interest rates on home loans, new home loans for real estate purchases in the second quarter of 2023 fell by 2.9% year-on-year. The average interest rate on housing loans continued to rise to 4.28% in the second quarter of 2023, compared to 3.74% in the first quarter of 2023 and 2.27% in the second quarter of 2022. The Central Bank of Cyprus also noted that lending criteria have become stricter compared to the previous quarter. However, these changes do not appear to have a significant impact on overall real estate demand in Cyprus until the second quarter of 2023, according to the Central''bank.

The Central Bank of Cyprus notes that, according to the State Statistical Service, the number of residential buildings for which building permits have been approved has decreased by 13%, from 906 in April-May 2022 to 788 in the same period of 2023. This decline may indicate a drop in construction activity at this time.