Increase in the demand for real estate

The real estate market in Cyprus showed an upturn in the first quarter of 2023, with continuing price increases, especially for apartments, driven by rising demand. According to data published by the Central Bank of Cyprus (CBC) on Tuesday, 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 a surge in housing demand. Data from the Department of Land and Cadastre indicate a significant year-on-year increase in demand for residential properties. Foreign buyers account for the largest annual growth, making up about half of the total number of buyers in 2022 and in the first quarter.

At the same time, the rate of growth in construction costs seems to be stabilizing compared to the years 2021-2022, which were characterized by significantly high growth rates. The annual growth of the residential property index in Limassol and Larnaca is accelerating, while in the Paphos area, despite a slowdown in trajectory, the percentage increase in residential property prices remains high.

Even with the increase in the key interest rate by the European Central Bank and the subsequent decline in mortgage demand in the first quarter of 2023, domestic demand for real estate seems to have been almost unaffected, as it continues to show growth. Prices for residential properties in Cyprus increased by 2.1% in the first quarter compared to 1.6% in the previous quarter. This growth is driven by a 2.3% increase in apartment prices and a 1.7% increase in house prices compared to the previous quarter. The annual growth in residential property prices also reached 7.7% compared to 6.6% in the fourth quarter of 2022. Apartment prices rose by 8.4% year-on-year, while house prices increased by 6.6%. Residential property prices are rising quarterly across all regions. Nicosia showed a growth of 1.3%, Limassol 2.9%, Larnaca 2.6%, Paphos 0.3%, and Famagusta 2.3%.

Regarding annual changes in real estate price indices by district, there has been an increase in all areas for the sixth consecutive quarter. Property prices in Nicosia rose by 4.3%, in Limassol by 10.6%, in Larnaca by 7.7%, in Paphos by 6.8%, and in Famagusta by 4%.

As for quarterly apartment prices, there has been an increase in all areas. Apartment prices in Nicosia rose by 1.4%, in Limassol by 2.4%, in Larnaca by 3.5%, in Paphos by 4.3%, and in Famagusta by 1.2%. Prices for apartments have been rising in all areas for the seventh consecutive quarter. In the first quarter of 2023, apartment prices in Nicosia increased by 4.4%, in Limassol by 10.4%, in Larnaca by 12.3%, in Paphos by 10.3%, and in Famagusta by 2.4% compared to the first quarter of 2022.

Foreign buyers

According to the latest data from the Department of Land and Cadastre (DLC), the number of documents for real estate sales continued to grow at an annual rate of 18.8%, reaching 3,574 compared to 3,009 last year. This reflects an increased demand for real estate. The number of properties sold to foreign buyers increased by 33.6% year-on-year (1,706 compared to 1,277), primarily from countries outside the European Union. Additionally, the number of properties sold to local buyers rose by 7.9% year-on-year (1,868 compared to 1,732). This surge in sales to foreign buyers is mainly linked to the "main office" policy, which attracts foreign specialists from Russia, Israel, Ukraine, the United Kingdom, Lebanon, and Belarus.

After six quarters of annual decline, the construction index showed a 5.5% increase in the first quarter.