According to the Central Bank of Cyprus Residential Property Price Index report released on Wednesday, property prices in Cyprus rebounded in the fourth quarter of last year thanks to strong local demand. In addition, rising construction costs were also considered to be a contributing factor to rising property prices.
Prices for houses and apartments during this time increased by 1.3% compared with the previous quarter, which is almost double the 0.6% increase observed in the third quarter of the same year. In addition, home and apartment prices rose 2.6% year-on-year in the fourth quarter, up from 1.2% in the previous quarter.
“The rise in housing prices is mainly due to the apartment market and to a lesser extent due to the purchase of houses,” the Central Bank said in a report, noting that “apartment prices rose in all districts, both quarterly and year-on-year” .
The report shows that home prices rose by 1% year on year while they increased by 0.7% qoq. Meanwhile, apartment prices rose 6.3% year-on-year and 1.3% quarter-on-quarter.
“The real estate market in the fourth quarter of 2021 continued to rely mainly on domestic demand,” the Central Bank said in a statement. As for the deals made last year, they primarily concerned houses with a value between 100,000 and 300,000 euros, a market segment that mainly affects households whose main goal is to buy their first home.This price range also included domestic investors who were looking to buy properties to rent out.
“Part of the increase in prices is also affected by the constant increase in construction costs,” the CBC report says, which notes that in the fourth quarter annual growth was 17.3%. Since most building materials are imported to Cyprus, it is expected that the war in Ukraine and supply chain problems affecting international trade will further increase the cost of construction,” the Central Bank added, stressing that this problem could negatively affect demand in the future. .
In terms of price changes for each district, the report showed that house prices rose in all districts on a quarterly basis, with the exception of Larnaca, where there was a decrease of 0.3% compared to the previous quarter. In Limassol, quarterly growth was 1.9%, followed by Nicosia with 1.2%, Paphos with 0.6% and Famagusta with 2.7%.
In terms of annual changes in house prices for each district, house prices in Nicosia rose by 0.4%, in Limassol by 5%, in Larnaca by 2.1%, in Paphos by 2% and in Famagusta by 1.4% . In addition, apartment prices increased in all areas on a quarterly basis: apartment prices in Nicosia rose by 0.8%, in Limassol by 3.4%, in Larnaca by 0.3%, in Paphos by 4.5% and in Famagusta by 3.4%.
“The continued rise in house prices is mainly due to domestic demand, which continues to be the largest equity market.” To a lesser extent, this is also due to the stabilization of demand from foreign investors, as well as the growth in construction costs,” the bank added. The Central Bank also explained that as a result of external shocks, prices for building materials have increased significantly.
“Property prices in Cyprus have generally not shown the significant upward trends seen in other Eurozone countries in recent years,” the Central Bank concluded, noting, however, that Limassol was an exception as the luxury apartment segment impacted the market.