Residential property prices in Cyprus continued their upward trend in the third quarter of 2023, with notable increases in apartment prices, according to the Central Bank of Cyprus (CBC).
The CBC’s Residential Property Price Index (RPPI) reported increases on a year-on-year and a quarterly basis compared to the previous quarters. According to official figures from the Department of Lands and Surveys, property transactions during the third quarter of 2023 also recorded a rise on an annual basis.
The heightened demand is attributed to domestic buyers, including those interested in buy-to-let investments, and foreign investors, particularly within the framework of the headquartering policy and other investments.
Regarding construction activity, there has been a decrease in the number of residential buildings for which building permits were issued during the period from January to August 2023 compared to the same period in 2022. This ongoing trend appears to be linked to the continued increase in construction and loan costs.
Overall, the increased demand, coupled with the limited supply of new properties in the market, appears to be the most significant factor contributing to the RPPI’s rise during the third quarter of 2023, as in previous quarters.
Changes in the Residential Property Price Index
The RPPI recorded an increase of 2.2% during the third quarter of 2023, compared to a 1.5% increase in the previous quarter. The third-quarter increase in the RPPI in 2023 is due to a 1.4% rise in house prices and a 3.6% rise in apartment prices.
On an annual basis, there was a 7.6% increase in property prices during the third quarter of 2023, compared to a 7.4% rise in the second quarter of the same year. Apartment prices recorded an 11.5% rise, while house prices rose 4.9%.
Higher residential property prices in Limassol and Larnaca
In the third quarter of 2023, residential property prices rose in all districts for the third consecutive quarter. Nicosia recorded an increase of 0.7%, Limassol 2.9%, Larnaca 2.8%, Paphos 2.4%, and Famagusta 2.8%.
A year-on-year increase was recorded in all districts. In Nicosia, residential property prices rose by 3.9%, in Limassol by 10.1%, in Larnaca by 10.5%, in Paphos by 7.6%, and in Famagusta by 6.4%.
The relatively high rate of increase in residential property prices in coastal districts appears to be due to demand from foreign buyers and investors, especially within the headquartering policy.
House prices
On a quarterly basis, house prices rose in all districts. Nicosia recorded a 0.3% increase, while Limassol, Larnaca, Paphos and Famagusta recorded increases of 1.4%, 2.5%, 1.1%, and 4.3% respectively.
On an annual basis, house prices also increased in all districts, with prices in Nicosia, Limassol, Larnaca, Paphos, and Famagusta rising by 3.8%, 5.1%, 8.3%, 3.1%, and 9.5%, respectively.
Apartment prices
On a quarterly basis, apartment prices rose in all districts with the exception of Famagusta, where they fell by 1.7%. Nicosia recorded a 1.5% increase, Limassol 4.0%, Larnaca 2.9%, and Paphos 5.2%.
A year-on-year increase was recorded in all districts with the exception of Famagusta, where they fell by 1.8%. Nicosia, Limassol, Larnaca, and Paphos recorded increases of 4.6%, 4.9%, 13.4%, and 18.5% respectively compared to the same quarter in 2022.
About the residential property price Indices
The residential property price indices for Cyprus are constructed by the Central Bank of Cyprus’ Real Estate Unit (REU), which is part of the Economic Analysis and Research Department, in collaboration with the member banks of the Association of Cyprus Banks (Bank of Cyprus, Hellenic Bank, Alpha Bank, National Bank of Greece, the Cyprus Development Bank, Societe Generale, Astro Bank, Ancoria Bank and Eurobank).
The indices are based on property valuation data collected since 2006 by the contracted banks, which receive the relevant information from independent property surveyors in connection with mortgage transactions, such as housing loans, mortgage refinancing and mortgage collateral. The data, which are representative of the Cyprus property market, cover all the areas under the effective control of the Republic of Cyprus (Nicosia, Limassol, Larnaca, Paphos and Famagusta) and refer to residential properties (houses and apartments).
The base period for all the indices is the first quarter of 2010 (i.e. 2010Q1=100). The Central Bank of Cyprus will be publishing the relevant data series on a quarterly basis. Further information and explanations on the methodology used for the construction of the various price indices is available in the methodology report.
Frequently Asked Questions: Residential Property Price Index
Further Reading
Central Bank of Cyprus: House Price Index Q3 2023 (English translation by Google)
