According to the latest report from the Central Bank of Cyprus, price growth is expected to accelerate in the fourth quarter of 2025, driven by strong demand from both local residents and foreign investors. Meanwhile, a positive trend is observed on the supply side: the number of building permits issued has increased significantly, laying the foundation for market saturation in the medium term.
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Buyer activity and distribution by district
The total number of purchase and sale contracts at the end of 2025 increased by 18.7% compared to the same period last year, reaching 4,941 transactions. Interestingly, both groups of buyers are active:
- Cypriots: 3% increase in purchases (2,901 transactions).
- International buyers: up 23.9% (2,040 transactions).
The distribution of activity by district is as follows:
- Limassol: leader in the number of transactions – 1,407 real estate purchase agreements.
- Nicosia: 1,124 transactions (mainly domestic demand – 84% of buyers were Cypriots).
- Larnaca: 1,109 transactions (balance between locals and foreigners).
- Paphos: 1,036 transactions (68% of buyers are foreigners).
- Famagusta : 265 transactions .
Mortgages and interest rates
Lower interest rates have provided a powerful stimulus for mortgage lending. The average weighted mortgage rate fell to 3.12% by December 2025 (compared to 4.30% a year earlier). This was due to the ECB’s easing monetary policy. As a result, new mortgage lending in 2025 increased by 23.1%, reaching €1.338 billion , compared to €1.087 billion in 2024. Demand for loans is fueled by interest in purchasing one-, two- , and three-bedroom residential properties for both personal use and rental purposes.
Supply outlook and construction costs
Between January and November 2025, the number of residential building permits increased by 36.1% , reaching 14,401 units, compared to 10,584 for the same period in 2024. This ensures a gradual influx of new residential properties onto the market in the coming years.
Despite positive expectations, the sector faces a number of challenges:
- Cost of materials: The price index remains at historically high levels due to geopolitics, although the annual increase was a moderate 1.4%.
- Labor Shortage: Labor shortages in the construction sector continue to put pressure on production costs, reflected in wage growth exceeding pre-pandemic levels.
Market forecasts and expectations
The European Commission’s Expectations Index rose to 29.1, indicating a prevailing view of further price increases. Buyers targeting one-, two- , and three-bedroom apartments and houses are eager to close before the next possible price hike. Strong tourism and higher education indicators are also supporting the market, stimulating demand for short- and long-term rentals.
Thus, the Cyprus residential property market is showing healthy dynamics: price growth is balanced by increasing construction volumes and the availability of financing, making it attractive for long-term planning in all key areas of the country.
