Apartment prices across Cyprus surged 10.8% in the first quarter of 2026, compared with the same period a year earlier, according to new figures released by the Cyprus Central Bank published earlier today.
The latest data highlights the continued strength of the island’s residential property market, driven largely by robust demand from overseas buyers, easing borrowing costs and persistently high construction expenses.
Overall, the House Price Index rose 7.5% year-on-year during the first three months of 2026. Apartment prices recorded the strongest growth, rising 10.8%, while house prices increased by a more modest 3%, indicating a slight slowdown in that segment of the market.
The figures also underline the long-term rise in property values. Compared with the Central Bank’s 2010 benchmark year, apartment prices nationwide are now 27% higher, while Limassol has recorded a striking 53% increase over the same period.
Foreign buyers continue to drive demand
The Central Bank attributed the ongoing rise in residential property prices primarily to strong demand from foreign buyers, supported to a lesser extent by domestic purchasers. Rising construction costs have also contributed to upward pressure on prices, although housing supply is gradually increasing.
On a quarterly basis, the overall House Price Index rose by 2.3% in the first quarter of 2026, slightly below the 2.4% increase recorded in the final quarter of 2025. House prices accelerated by 1.5% quarter-on-quarter, while apartment prices increased by 2.4%, although at a slower pace than previously.
District performance was mixed. Annual house price growth accelerated in Nicosia, where prices rose by 2.8%, and in Larnaca, which recorded an 8.9% increase. Growth slowed in Limassol and Paphos, where prices rose by 9.1% and 6.4% respectively. Famagusta remained broadly unchanged compared with the previous quarter.
Within the housing sector, Nicosia returned to annual growth of 1.8% after a period of declines, while Famagusta recorded a slight annual fall of 0.7%.
Apartment prices, meanwhile, accelerated only in Limassol, where values climbed by 10.7% year-on-year. Growth moderated in Larnaca, Paphos and Famagusta, while Nicosia maintained a steady annual growth rate of 3%.
Property sales and mortgage lending strengthen
Demand for property remained strong throughout the quarter. According to the Department of Lands and Surveys, the total number of sales contracts increased by 13.8% year-on-year, reaching 4,709 transactions compared with 4,137 in the first quarter of 2025.
The increase was largely driven by international buyers. Property purchases by foreign investors rose by 22.3% to 2,044 transactions, while purchases by domestic buyers increased by 8.1% to 2,665.
Limassol recorded the highest number of transactions at 1,499, followed by Nicosia with 1,065, Larnaca with 994 and Paphos with 919. Famagusta recorded the fewest transactions at 232.
Domestic buyers accounted for 84% of purchases in Nicosia, while local purchasers represented around 60% of buyers in both Limassol and Famagusta. In Larnaca, domestic and foreign demand was broadly balanced, whereas overseas buyers dominated the Paphos market, accounting for 75% of transactions.
Mortgage activity also continued to strengthen. The Central Bank reported that lending to households for home purchases maintained a strong upward trend during the first quarter.
Net new mortgage lending increased by 24.5% year-on-year, reaching €353.6 million, compared with €284.1 million during the same period in 2025.
The weighted average mortgage interest rate fell to 3.15% in March 2026, down from 3.53% a year earlier. The decline reflects the gradual easing of monetary policy by the European Central Bank since mid-2024 and has helped support housing demand.
The Central Bank’s April 2026 Bank Lending Survey also showed rising demand for housing loans during the quarter, while lending criteria remained unchanged at relatively strict levels. Banks expect mortgage demand to remain stable during the second quarter of 2026, although lending standards could tighten further.
Housing supply expands but cost pressures remain
On the supply side, there are signs that new housing stock is gradually entering the market.
According to the Cyprus Statistical Service, the number of residential units granted building permits rose by 79.2% year-on-year during the first two months of 2026, increasing from 1,932 units to 3,463 units.
The Central Bank believes this trend will support a gradual increase in housing supply over the medium term. Survey data from the European Commission also points to continued expansion in construction activity, with the sector remaining in positive territory for a tenth consecutive quarter.
However, cost pressures remain significant. Construction material prices increased by 0.9% year-on-year in the first quarter, remaining close to historic highs due to ongoing geopolitical disruptions and supply chain challenges.
Looking ahead, market sentiment suggests further price growth may be on the horizon. The European Commission’s property price expectations indicator rose to 32.8 in the first quarter of 2026, up from 24.6 a year earlier, indicating that a growing number of market participants expect residential property prices in Cyprus to continue rising in the coming months.
Labour shortages within the construction sector are also contributing to upward pressure on prices. The Central Bank noted that wage growth in the industry remains elevated compared with pre-pandemic levels, adding further costs for developers and builders.
Despite a gradual increase in housing supply, strong foreign demand, improving mortgage conditions and persistent construction pressures continue to underpin the upward trajectory of Cyprus’s residential property market.
