26.10.2023
The number of sales contracts submitted to the Department of Lands and Surveys reached a 15-year high in the second quarter of 2023, according to the Central Bank of Cyprus. In addition, residential property prices in Cyprus continued to increase significantly on a quarterly and annual basis.
In the second quarter of 2023, the CBC Residential Property Price Index recorded a growth of 1.5%, compared to a growth of 2.1% in the previous quarter. The growth was driven by a 0.7% rise in residential property prices and a 3.1% rise in apartment prices, according to CBC.
Year-on-year, residential property prices rose 7.4% in Q2 2023, up from +7.7% in Q1 2023, with apartment prices up 10.1% and houses up 5.6% %.
The largest share of transactions comes from local buyers, and the largest annual increase in sales contracts comes from foreign buyers.
“Increased demand coupled with limited supply of new housing appears to be the most important factors driving RPPI growth in the second quarter of 2023,” CBC said. The increased demand from foreigners is mainly driven by “headquarters politics” and the large number of students and other investors in the property market, while the higher local demand appears to be mainly driven by buy-to-let investment ).
CBC reports that until the second quarter of 2023, the European Central Bank’s hike in key interest rates and subsequent reduction in demand for mortgages had not significantly impacted domestic property demand, which continues to grow. “Therefore, with construction costs stabilizing through 2023, rising home prices are driven primarily by increased demand coupled with limited supply.”
Price changes
In the second quarter, residential property prices increased quarterly in all areas. 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 .
In terms of year-over-year changes, all counties saw increases for the seventh straight quarter. Property prices in Nicosia 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%.
On a quarterly basis, residential property prices increased in all areas except Limassol , where a slight decrease was recorded. In Nicosia, residential property 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 fall of 0.4% .
Year-on-year, residential property prices recorded an increase in all areas. Residential property prices in Nicosia, Limassol , Larnaca , Paphos and Famagusta increased by 4.8%, 6.5%, 6.3%, 4.7% and 7.4% respectively.
Apartment prices recorded quarterly increases in each area. They rose by 1.4% in Nicosia, 4% in Limassol , 4.1% in Larnaca , 6.5 % in Paphos and 2.5% in Famagusta . Year-on-year, apartment prices rose in all areas for the eighth quarter in a row.
In the second quarter, 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 the second quarter quarter of 2022.
Sales and purchase agreements
The number of sales agreements in the second quarter of 2023 was up 26.5% year-over-year, with 4,115 sales documents filed, up from 3,254 in the second quarter of 2022, a 15-year high.
The number of properties sold to foreign buyers increased by 38.5% annually (1,871 from 1,351 in the second quarter of 2022) and the number of properties sold to local buyers increased by 17.9% (2,244 from 1,903 in the second quarter of 2022) of the year).
Mortgage
Following the ECB rate hike, new home loans fell by 2.9% year on year in April-June (€248.7 million compared to €256.1 million in the second quarter of 2022). Additionally, mortgage interest rates continued to rise in the second quarter of 2023, averaging 4.28% compared to 3.74% in the first quarter of 2023 and 2.27% in the second quarter of 2022. The CBC said funding criteria have become more stringent compared to January-March.
Construction permits
The number of residential units for which building permits were approved decreased by 13%, falling to 788 in April-May 2023, compared to 906 in the same period in 2022.
