Property sale contracts hit 15-year high

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The number of sales contracts submitted to the Land and Surveys Department reached a 15-year high in the second quarter of 2023, according to Central Bank of Cyprus data.

In addition, residential property prices in Cyprus continued recording significant increases on a quarterly and annual level.

In Q2 2023, the CBC Residential Property Price Index registered a 1.5% increase compared to a 2.1% rise in the previous quarter.

According to the CBC, the increase comes from a 0.7% increase in house prices and a 3.1% hike in apartment prices.

On an annual basis, residential prices recorded an increase of 7.4% in Q2 2023, compared to +7.7% in Q1 2023, with apartment prices rising by 10.1% and houses by 5.6%.

Local buyers made up the largest proportion of transactions, while the biggest annual increase in sales contracts came from foreign buyers.

“Increased demand, coupled with limited new housing supply, appear to be the most important factors contributing to RPPI growth in Q2 2023,” the CBC said.

Increased demand from foreigners is mainly due to the “headquartering policy” and the bigger number of students and other investors in the real estate market, while higher local demand seems to be mainly due to investments in renting (buy-to-let).

The CBC reports that up to Q2 2023, the European Central Bank’s increase in key interest rates and the consequent reduction in mortgage loan demand has not affected domestic demand for real estate substantially, which remains upward.

“Therefore, and with construction costs stabilising through 2023, increases in home prices are driven primarily by increased demand combined with limited supply.”

Price changes

In Q2, residential property prices increased in all districts quarterly.

An increase of 1.5% was recorded in Nicosia, 1.4% in Limassol, 2.7% in Larnaca, 2.7% in Paphos and 2% in Famagusta.

Regarding year-on-year changes, all districts increased for the seventh consecutive quarter.

Nicosia property prices increased by 4.4%, in Limassol by 10.1%, in Larnaca by 8.7%, in Paphos by 7.9% and in Famagusta by 5.9%.

Quarterly, house prices increased in all districts except Limassol, where a marginal decrease was recorded.

In Nicosia, house prices increased by 1.8%, in Larnaca by 1.7%, in Paphos by 0.9% and in Famagusta by 1.9%, while in Limassol they recorded a drop of 0.4%.

On an annual basis, house prices recorded an increase in all districts.

House prices in Nicosia, Limassol, Larnaca, Paphos and Famagusta increased by 4.8%, 6.5%, 6.3%, 4.7% and 7.4%, respectively.

Apartment prices quarterly recorded an increase in every district.

They increased by 1.4% in Nicosia, 4% in Limassol, 4.1% in Larnaca, 6.5% in Paphos and 2.5% in Famagusta.

On a year-over-year basis, apartment prices rose in all districts for the eighth consecutive quarter.

In Q2, apartment prices in Nicosia increased by 4.2%, Limassol by 13.9%, Larnaca by 13.1%, Paphos by 16.3%, and Famagusta by 2.5 %, compared to Q2 2022.

Sales contracts

Sales contracts in Q2 2023 rose 26.5% year-on-year, with 4,115 sale documents submitted, compared to 3,254 in Q2 2022, marking a 15-year high.

There was a 38.5% annual increase in the number of properties sold to foreign buyers (1,871 from 1,351 in Q2 2022), while properties sold to local buyers increased by 17.9% (2,244 from 1,903 in Q2 2022).

Mortgages drop

Following the ECB rates increase, new loans for the purchase of housing in April-June decreased by 2.9% year-on-year (€248.7 million compared to €256.1 million in Q2 2022).

Also, the mortgage interest rate during Q2 2023 continued to increase, averaging 4.28%, compared to 3.74% in Q1 2023 and 2.27% in Q2 2022.

CBC said that funding criteria became stricter compared to the January-March.

Building Permits

The number of residential units for which building permits have been approved, a leading indicator of construction activity, a 13% decrease was recorded, dropping to 788 in April-May 2023, compared to 906 during the same period of 2022.