Cyprus’ Residential Property Price Index recorded an increase of 0.5% in the second quarter of 2019, compared to the previous quarter and an increase of 2.8% annually.
According to data released by the Central Bank of Cyprus (CBC), the index recorded an increase in all districts of Cyprus.
Apartment prices increased by 1.1% quarter on quarter and by 4.3% year on year, while house prices went up 0.3% on a quarterly base and by 2.3% YoY.
On a yearly basis, significant increases were observed in apartment prices in Larnaca (9.4%) and Limassol (7.2%), mainly in the coastal areas due to foreign demand.
“The Residential Property Price Index in Cyprus continues to grow, along with the recovery of various macroeconomic indicators and the wider economy,” the CBC said.
It warned, however, that “there are uneven increases in specific areas but also downward risks, making it useful if not necessary to closely follow developments.”
The CBC notes that the continued decline in demand for real estate for the purposes of the Cyprus Investment Program may reduce or push real estate prices down in certain areas.
At the same time, the Central Bank points out the possible impact on real estate prices, if a large number of properties held by banks and credit acquiring companies flood the market.
It also argued that other impacts from external factors, such as Brexit, cannot be ruled out.
The Central Bank attributes the increase in apartment prices to insufficient supply in the market, not being able to meet the needs of the increased number of students and foreign workers who choose to live in apartments rather than houses.
It said demand for luxury properties dropped after the controversial Cyprus passport for investment scheme tightened its criteria in May 2019.