07.10.2022
An accelerated rise in house prices was recorded in the second quarter of 2022, mainly due to rising construction costs, according to the Central Bank of Cyprus quarterly real estate report.
The Central Bank House Price Index (CPI) for houses and apartments showed growth in the second quarter, recording a quarterly increase of 1.7% compared to 1.1% in the previous quarter. The index rose 4.7% year on year compared to 3.2% in the previous quarter.
The rise in housing prices is associated with an increase in construction costs, which is reflected in the rise in prices for both apartments and houses, the Central Bank said. While apartment prices are rising more year-on-year than houses in all areas, house prices are currently on the rise as well.
“For the first time since the outbreak of the pandemic, all areas are seeing annual increases in prices for both apartments and houses, indicating an upward trend in prices across the spectrum of the housing market,” the report says.
Demand in the real estate market in the second quarter tended to increase both domestically and from abroad, while supply showed signs of declining.
“The war in Ukraine has increased inflationary pressure, which has significantly affected the cost of construction, but at present this does not have a negative impact on demand.
“Over the medium term, higher borrowing costs due to higher interest rates and lower revenues due to inflationary pressures are expected to reduce demand, but without necessarily lowering prices, which are currently on an upward trend due to construction costs.”
