Construction costs and increased demand from foreign and Cypriot buyers contributed to the acceleration in house price increases during the third quarter of 2022.
According to the Central Bank, the Residential Property Price Index (RPPI) continued its upward trend in Q3 2022, increasing by 2.1% from 1.7% the previous quarter.
Year-on-year, the index increased by 6.3% compared to a 4.7% increase in the previous quarter.
Real estate transactions in the first nine months of 2022, as recorded in the Lands and Surveys Department’s sales document data, show accelerated growth attributed to year-on-year increases in demand from domestic and foreign investors.
Inflationary pressures, which significantly impact construction costs, continued in Q3, but so far do not seem to be negatively impacting demand.
The RPPI concerning houses and apartments registered a quarterly increase of 2.1% in Q3.
The rise comes from a 2.2% increase in apartment prices over the previous quarter and a 2.0% jump in house prices over the same period.
On a year-over-year basis, house price growth also accelerated by 6.3% in Q3 2022, compared to 4.7% in Q2.
Apartment prices during the quarter recorded an annual increase of 8% and house prices by 5.2%.
Demand by professionals in the context of the government’s international headquartering programme is considered the most important drive for the demand by foreign investors.
In Q3 2022, house prices increased quarterly in all districts.
An increase of 1.2% was recorded in Nicosia, 3.0% in Limassol, 1.2% in Larnaca, 2.6% in Paphos and 2.3% in Famagusta.
An increase was also recorded in all districts on an annual basis.
Nicosia house prices increased by 4.4%, in Limassol by 8%, in Larnaca by 2.8%, in Paphos by 8.2% and in Famagusta by 8%.
According to the Department of Lands and Surveys (DSS), the number of sales documents increased in Q3 by 33.8% year-on-year (3,347 from 2,502), reflecting increased demand for real estate.
Additionally, during the quarter, there was a 67.3% year-on-year increase in the number of properties traded to foreign buyers (1,506 from 900), driven by a 32% spike in purchases by residents within the EU and a 1% increase in purchases from non-EU residents.
At the same time, inflationary pressures and the rise in key ECB interest rates seem to have negatively affected the demand for new housing loans.
According to the CBC’s Monetary and Financial Statistics, new mortgage loans in Q3 2022 decreased by 12.3% and 6.7% on an annual and quarterly basis, amounting to €238.8 mln from €273 mln in Q3 2021 and €256.1 mln in Q2 2022.