Growing demand for real estate

The real estate market in Cyprus showed growth in the first quarter of 2023, with prices, especially for apartments, continuing to rise, driven by increasing demand.

According to data released by the Central Bank of Cyprus (CBC), the Residential Property Price Index (RPPI) showed a significant acceleration compared to previous quarters. Sales and demand indicators for real estate in the first quarter confirm the surge in demand for housing. Data from the Department of Land and Subdivisions shows a significant year-over-year increase in residential real estate demand. Foreign buyers account for the largest annual increase, representing approximately half of the total number of buyers in 2022 and the first quarter.

At the same time, the growth rate of construction costs seems to be stabilizing compared to 2021-2022, which were characterized by high growth rates. Annual RPPI growth in Limassol and Larnaca is accelerating, while in the Paphos area, despite the slowdown, the percentage of residential property price growth remains high. Even with the European Central Bank raising key interest rates and the corresponding decline in mortgage demand in the first quarter of 2023, domestic real estate demand seems to be almost unaffected as it continues to grow.

Real estate prices

The house and apartment price index showed a quarterly increase of 2.1% in the first quarter, up from 1.6% in the previous quarter. This increase was driven by a 2.3% increase in apartment prices and a 1.7% increase in house prices from the previous quarter. Annualized residential real estate price growth was also 7.7%, up from 6.6% in the fourth quarter of 2022. Apartment prices rose at an 8.4% annualized rate in the quarter, while house prices increased 6.6%. Residential property prices showed quarterly increases in all areas. Nicosia recorded an increase of 1.3%, Limassol +2.9%, Larnaca +2.6%, Paphos +0.3%, and Famagusta +2.3%. Regarding the year-on-year changes in property price indices by area, all areas saw an increase for the sixth consecutive quarter. Property prices in Nicosia increased by 4.3%, in Limassol by 10.6%, in Larnaca by 7.7%, in Paphos by 6.8%, and in Famagusta by 4%.

Foreign buyers

According to the latest figures from the Department of Land and Subdivisions (DLS), the number of property sale deeds continues to grow at an 18.8% annual rate to 3,574 compared to 3,009 last year. This reflects the increased demand for real estate. The number of properties sold to foreign buyers increased significantly by 33.6% p.a. (1,706 compared to 1,277), predominantly from outside the EU. In addition, the number of properties sold to local buyers increased by 7.9% p.a. (1,868 compared to 1,732). This surge in document sales to foreign buyers is mainly due to the "headquarters" policy, which attracts foreign professionals from Russia, Israel, Ukraine, the UK, Lebanon and Belarus.

After six quarters of year-over-year declines, the construction index recorded a 5.5% increase in the first quarter.