11,689 real estate transactions were concluded from January to August, which is 13% more than the same period in 2024.
Limassol maintains its lead with 3,720 transactions over the eight months, also 13% higher than last year. However, the house price index increased by only 1% in the second quarter—a sharp slowdown compared to the double-digit increases seen since the pandemic.
Demand stability is driven primarily by foreign buyers, most of whom purchase properties with cash. Meanwhile, local buyers face limited access to mortgages, with interest rates remaining around 4%.
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Foreign capital: geography of demand
In the first seven months of 2025, the number of transactions involving foreigners increased by 15% . The largest number of properties were transferred to third-country nationals:
- Paphos : 20,755;
- Limassol : 17,083;
- Larnaca : 9,175.
However, as the Auditor General’s report indicates, a significant portion of purchases are made through Cypriot or European companies, complicating ownership transparency. Legislators are developing a legal framework for mandatory ownership verification after each transaction; changes are expected in 2026.
Impact on the rental market and standard of living
Rent increases in Limassol and Nicosia are ranging from 8 to 10%, forcing many renters to spend over 40% of their income on living expenses. This is prompting local buyers to shift their focus to inner-city areas, particularly in the capital, where three-bedroom homes are available for €1,750 to €2,100 per square meter.
Construction sector: rising costs and environmental changes
The construction cost index increased by 6% year-on-year due to rising energy prices, imported materials, and labor shortages. The implementation of EU standards for near-zero-energy buildings is creating additional pressure. However, certified energy-efficient buildings are currently selling for 5-7% more , confirming a shift in interest toward green development.
Regional trends and consequences of natural disasters
In Paphos, the gap between affordable apartments and luxury homes has increased. In the first half of 2025:
- The average price of an apartment was €129,774 (203 transactions);
- The average house price was €386,828 (90 transactions).
On the island, houses generated €190.3 million in turnover , apartments €185 million (1,162 transactions).
Meanwhile, forest fires in Limassol in July destroyed or damaged 706 buildings , covering a total area of 124 square kilometers. The cost of restoration is approximately €37.95 million , and insurance payments have already exceeded €20 million. These events have led to a revision of insurance rates and increased interest in areas outside the risk zones.
New projects—such as the A7 motorway (Paphos-Polis), the Paphos marina , and the reconstruction of Larnaca port —are stimulating demand in outlying areas. Furthermore, the Ministry of Finance is preparing a property tax reform , which will base valuations on current market prices from 2025, rather than outdated data from 2018. This could increase the tax burden on coastal areas.
Tourism, migration and long-term prospects
In the first nine months of 2025, tourist arrivals increased by 9% , supporting short-term rental profitability. The relocation of citizens from Lebanon, Israel, and Ukraine continues to support demand for long-term rentals. Profitability in coastal areas is 5-6%, while inland areas are showing 3-4%.
Experts predict moderate price growth of 2-4% in 2026, driven by stable foreign demand and a limited supply of energy-efficient properties. After rapid growth, the Cyprus real estate market is entering a more stable phase of development .
