Cyprus real estate booms in Q3 2023

Cyprus experienced a real estate boom in the third quarter of 2023, with housing prices soaring and a surge in demand from both domestic and foreign buyers, according to data released by the Central Bank of Cyprus (CBC) on Wednesday.

The Residential Property Price Index (RPPI) maintained by the CBC showcases a consistent upward trajectory, signaling annual and quarterly increases. Concurrently, data from the Department of Lands and Surveys reveals a notable uptick in property transactions during the same period.

The heightened demand is credited to domestic buyers, including those seeking buy-to-let opportunities, and foreign investors, particularly those capitalizing on initiatives like the headquartering policy.

Despite the increased demand, construction activity has seen a dip in the issuance of building permits for residential buildings from January to August 2023 compared to the same period in 2022. This trend is linked to the escalating costs associated with construction and loans.

The limited supply of new properties in the market, coupled with heightened demand, has emerged as the primary driving force behind the RPPI's surge during Q3 2023.

RPPI Changes: A Closer Look

The RPPI for houses and apartments witnessed a 2.2% increase in Q3 2023, compared to a 1.5% rise in the previous quarter. This growth is attributed to a 1.4% increase in house prices and a notable 3.6% surge in apartment prices.

On an annual basis, property prices exhibited a robust 7.6% increase during Q3 2023, with apartment prices leading the way with an 11.5% surge, while house prices increased by a commendable 4.9%.

District-wise Trends: From Coastal Havens to Urban Centers

Quarterly housing prices experienced an uptick across all districts during Q3 2023, marking the third consecutive quarter of growth. Limassol emerged as the front-runner with the highest quarterly increase at 2.9%, closely followed by Larnaca (2.8%), Famagusta (2.8%), Pafos (2.4%), and Nicosia (0.7%).

On an annual basis, all districts observed an RPPI increase, with Limassol leading the pack at an impressive 10.1%, followed by Larnaca (10.5%), Pafos (7.6%), Famagusta (6.4%), and Nicosia (3.9%).

Quarterly and annual increases in house and apartment prices varied across districts, with coastal areas experiencing relatively higher rates. This is likely due to increased demand from foreign buyers, especially within the headquartering policy framework.

The Land Registry reported a significant 14.4% annual increase in sales documents during Q3 2023, reflecting the growing demand for properties. Foreign buyer acquisitions rose by 13.7% annually, while domestic purchases increased by an impressive 15% during the same period.

The Republic of Cyprus' real estate sector remains a hotbed of activity, with the market witnessing dynamic shifts driven by a combination of domestic and international factors. The continued surge in housing prices and demand underscores the island nation's appeal as a real estate destination in the Mediterranean.