Cyprus Real Estate Market Update: Property Prices Increasing - Shift Towards Apartments

The upward trend in housing prices continued during the fourth quarter of 2023, primarily driven by increases in apartment prices, according to data released today by the Central Bank and presented in StatWatch.

During the fourth quarter of 2023, the House Price Index (HPI) of the Central Bank of Cyprus (CBC) (houses and apartments) continued its upward trajectory, recording increases on both an annual and quarterly basis.

On an annual basis, there was an 8.3% increase in housing prices in the fourth quarter of 2023, compared to 7.6% in the third quarter of 2023. Apartment prices saw a 12.7% increase, while house prices increased by 5.7% during the quarter under review.

The HPI (houses and apartments) during the fourth quarter of 2023 recorded a quarterly increase of 2.3% compared to a 2.2% increase in the previous quarter.

The increase in the HPI during the fourth quarter of 2023 compared to the previous quarter stemmed from a 1.8% increase in house prices and a 3.2% increase in apartment prices.

Slowdown in property transactions

According to data from the Department of Land and Surveys (DLS), the total number of property transactions filed with District Offices, encompassing all types of properties, experienced a slowing increase on an annual basis during the fourth quarter of 2023. This increase in overall property demand came from domestic buyers, while a decrease was observed in the number of property transactions filed by foreign buyers.

Additionally, there was a decrease in the number of registrations of companies of foreign interest through the Unit for Company Service Providers compared to 2022, as part of the "Headquartering Policy" aiming to attract companies for establishment and/or expansion of activities in Cyprus.

Shift towards apartments

Furthermore, there continues to be relatively higher demand for apartments compared to houses. This shift is driven by buyers opting for smaller properties, as reflected in reduced square footage per residential unit for which building permits were issued.

On the supply side, according to market sources, supply remains limited compared to the high levels of demand. This appears to be a significant factor contributing to the increase in the HPI.

However, it is argued that the increase in the number of residential units for which building permits were issued in 2023, combined with the fact that there are already a significant number of construction projects underway, is expected to increase the supply of residential properties in the medium term. This is anticipated to alleviate the pressures driving the rise in prices.

source: Stockwatch