02.01.2024
In the second quarter of 2023, home prices continued to rise due to strong demand for properties from both domestic and foreign buyers.
Since domestic “demand” remains high despite rising mortgage rates and subsequent contraction of mortgages due to the ECB’s single monetary policy, and while external demand is increasing significantly due to increased interest from foreign companies, The number of properties sold has reached its highest level in fifteen years.
As building materials prices decline monthly and begin to stabilize, rising home prices largely reflect a significant increase in “demand” and limited supply.
Up until the 2nd quarter of 2023, the rise in key interest rates by the European Central Bank (ECB) and the subsequent decline in mortgage demand appears to have had no impact on the Cyprus property market, with domestic property demand continuing to rise.
On an annualized basis, residential property prices rose 7.4% in the second quarter of 2023, up from 7.7% in the first quarter of 2023. Prices for apartments increased by 10.1%, for houses – by 5.6%.
Price changes by city
Year-on-year, residential property prices increased in all provinces. In Nicosia they increased by 4.8%, in Limassol by 6.5%, in Larnaca by 6.3%, in Paphos by 4.7% and in Famagusta by 7.4%.
Apartment prices increased quarterly in Nicosia by 1.4%, in Limassol by 4.0%, in Larnaca by 4.1%, in Paphos by 6.5% and in Famagusta by 2.5% . Year-on-year, apartment prices rose in all provinces for the eighth consecutive quarter.
In the second quarter of 2023, the number of properties sold to foreign buyers increased by 38.5% compared to 1,351 in the second quarter of 2022. The number of properties sold to domestic buyers increased by 17.9% year-over-year (2,244 compared to 1,903 in the second quarter of 2022).
The increase in the number of property sales documents to foreign buyers is mainly due to foreign companies viewing Cyprus as an attractive destination for professionals from countries such as Israel, Ukraine, UK, Lebanon and Belarus, while a corresponding increase in interest among Cypriots is due to investments in real estate for rental purposes.
Funding criteria have become more stringent compared to the previous quarter, according to a bank lending survey, with the same survey confirming a continued decline in demand for loans. However, the above developments do not appear to have had a significant impact on overall property demand until the second quarter of 2023.
