Housing prices in upward trend

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The Cyprus real estate market remains robust, as it witnessed a remarkable surge in housing prices in the third quarter of 2023, driven by demand from both domestic and international buyers.

According to data released by the Central Bank of Cyprus (CBC), housing market prices continued an upward path in the third quarter of 2023, with apartments recording the highest increase.

CBC’s Residential Property Price Index (RPPI) demonstrated a consistent upward trend, indicating increases both annually and quarterly.

In the third quarter of 2023, the RPPI for houses and apartments saw a 2.2% increase, compared to a 1.5% rise in the previous quarter, attributed to a 1.4% increase in house prices and a notable 3.6% surge in apartment prices.

On an annual basis, property prices demonstrated a robust 7.6% increase during the same period, with apartment prices leading the way with an 11.5% surge, while house prices increased commendably by 4.9%.

Quarterly housing prices increased across all districts during the third quarter of 2023, marking the third consecutive quarter of growth.

Limassol was the front-runner with the highest quarterly increase at 2.9%, closely followed by Larnaca (2.8%), Famagusta (2.8%), Paphos (2.4%) and Nicosia (0.7%).

On an annual basis, all districts observed an RPPI increase, with Limassol leading the pack at an impressive 10.1%, followed by Larnaca (10.5%), Paphos (7.6%), Famagusta (6.4%) and Nicosia (3.9%).

Coastal areas

Quarterly and annual increases in house and apartment prices varied across districts, with coastal areas experiencing relatively higher rates, likely due to increased demand from foreign buyers, especially within the ‘headquartering’ policy framework.

This surge in demand, noted the CBC, is attributed to both local buyers, including local and foreign investors exploring buy-to-let opportunities, particularly those taking advantage of government incentive schemes like the headquartering and management relocation policy.

The limited availability of new properties in the market also acted as a catalyst behind the RPPI’s surge during the third quarter of 2023.

At the same, data from the Department of Lands and Surveys highlighted a significant rise in property transactions during the same quarter.

The Land Registry reported a substantial 14.4% annual increase in sales documents during the third quarter of 2023, reflecting the growing demand for properties.

Foreign buyer acquisitions rose by 13.7% annually, while domestic purchases increased impressively by 15% during the same period.

Despite the increased demand, there has been a decline in construction activity, evident in the decrease in the issuance of building permits for residential buildings from January to August 2023 compared to the corresponding period in 2022.

This trend is believed to be linked to escalating construction and borrowing costs.