06.02.2023
Construction costs and increased demand from foreign and local buyers helped accelerate home price growth in the third quarter of 2022.
According to the Central Bank of Cyprus (CBC), the Residential Property Price Index (RPPI) continued its upward trend in the third quarter of 2022, up 2.1% from a 1.7% increase in the previous quarter, while year on year, the index increased by 6.3% compared to a 4.7% increase in the previous quarter.
Real estate transactions in the first nine months of 2022, as indicated in the Department of Lands and Surveys’ sales documents, are showing accelerated growth, driven by an annual increase in demand from both domestic and foreign investors.
Inflationary pressure, which has a significant impact on construction costs, continued in Q3, but does not yet appear to be having a negative impact on demand.
The RPPI for houses and apartments recorded a quarterly growth of 2.1% in the third quarter of 2022, compared to 1.7% in the previous quarter. The increase was driven by a 2.2% quarter-on-quarter increase in apartment prices and a 2.0% increase in house 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 of 2022. Apartment prices in the reporting quarter recorded an annual growth of 8% and housing prices by 5.2%.
Demand from foreign professionals in the context of the headquarters program in different countries is considered the most important driver for demand from foreign investors.
In the third quarter of 2022, house prices rose quarterly in all areas. In particular, growth was 1.2% 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. In particular, in Nicosia housing prices 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 latest data from the Department of Lands and Surveying (DSS), the number of sales documents in the third quarter of 2022 continued to grow at 33.8% year-on-year (3347 compared to 2502), reflecting increased demand for real estate.
In addition, during the quarter under review, the number of properties sold to foreign buyers increased by 67.3% compared to the same period last year (1506 compared to 900), driven by a 32% increase in purchases by residents of the European Union (EU). ) and 104.1% increase in purchases 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, respectively, amounting to 238.8 million euros in the third quarter of 2022, compared to 273 million euros in the third quarter of 2022. the third quarter of 2021 and 256.1 million euros in the second quarter of 2022.
