Property values in Cyprus continued to rise during the final quarter of 2023, with apartment prices being the primary catalyst, according to a report published by the Central Bank of Cyprus on Tuesday: the House Price Index (HPI) maintained its upward trajectory annually and quarterly.
Despite a slight decline in demand, evidenced by comparative sales data from the CTI, property prices persisted in their upward trend during the fourth quarter of 2023. Contributing factors included rising mortgage rates impacting new mortgage demand, a normalization of foreign buyer interest, an increase in residential property supply, and stabilized construction material prices. Consequently, the expectation is for the CPI to show more moderate increases shortly.
Data from the Department of Lands and Surveys (DLS) revealed a slowdown in the year-on-year increase of total sales documents filed with District Offices, driven by decreased activity from foreign buyers. Additionally, fewer registrations of companies of foreign interests through the Company Facility Unit were recorded, aligning with the “Strategy for Attracting Companies to Operate and/or Expand their Activities in Cyprus.”
DLS’s comparative sales data indicated a slight decrease in the total value and number of residential property transactions in 2023 compared to the previous year. The decline is attributed to rising mortgage rates and reduced mortgage loan approvals – for instance, demand for apartments exceeded that for houses, reflecting a preference for smaller properties.
Supply-side constraints were noted, with limited supply compared to demand levels contributing to price increases; however, an increase in residential units for which building permits were issued in 2023, coupled with ongoing construction projects, is expected to alleviate supply pressures in the medium term.
The House Price Index increased by 2.3% in the fourth quarter of 2023, driven by a 1.8% rise in house prices and a 3.2% increase in apartment prices. House prices rose by 8.3%, while apartment prices surged by 12.7%.
Notably, significant quarterly price increases were observed in Limassol and Larnaca, with Nicosia, Paphos and Famagusta also experiencing notable upticks; however, sales to foreign buyers decreased year-on-year.
