02.02.2023
Construction costs and increased demand from foreign and Cypriot buyers contributed to accelerating house price growth in the third quarter of 2022.
According to the Central Bank, the Residential Property Price Index (RPPI) continued its upward momentum in the third quarter of 2022, rising by 2.1% from 1.7% in the previous quarter.
On an annualized basis, the index rose 6.3% compared to a 4.7% increase in the previous quarter.
Real estate transactions in the first nine months of 2022, as shown in the Department of Lands and Surveys’ sales documents, are showing accelerated growth, driven by an annual increase in demand from local and foreign investors.
Inflationary pressures, which significantly affected construction costs, continued into the third quarter, but so far do not appear to be having a negative impact on demand.
The consumer price index for houses and apartments recorded a quarterly increase of 2.1% in the third quarter. This increase was driven by a 2.2% quarter-on-quarter increase in apartment prices and a 2.0% jump in home prices over the same period.
On an annualized basis, house price growth also accelerated by 6.3% in the third quarter of 2022, compared to 4.7% in the second quarter. Apartment prices during the quarter recorded an annual increase of 8%, and housing prices by 5.2%.
Demand from professionals in the context of the government’s program to open headquarters on an international scale is considered the most important driver for demand from foreign investors.
In the third quarter of 2022, house prices rose quarterly in all areas. An increase of 1.2% was recorded in Nicosia, 3.0% in Limassol, 1.2% in Larnaca, 2.6% in Paphos and 2.3% in Famagusta. Growth was also recorded in all districts on an annualized basis. House prices in Nicosia rose by 4.4%, in Limassol by 8%, in Larnaca by 2.8%, in Paphos by 8.2% and in Famagusta by 8%.
According to the Department of Lands and Surveys (DSS), the number of sales documents increased in the third quarter by 33.8% year on year (3,347 from 2,502), reflecting an increase in demand for real estate.
In addition, during the quarter, the number of properties sold to foreign buyers increased by 67.3% year-on-year (1,506 from 900), driven by a 32% increase in purchases by EU residents and a 1% increase. when buying from non-EU residents.
At the same time, inflationary pressures and an increase in the ECB’s key interest rates seem to have weighed on demand for new housing loans.
According to CBC monetary and financial statistics, new mortgage loans in the third quarter of 2022 decreased by 12.3% and 6.7% year-on-year and quarterly, amounting to 238.8 million euros from 273 million euros in the third quarter of 2021 and €256.1 million in the second quarter of 2022.
