Real estate prices picked up speed

Property prices have risen significantly in Cyprus

House price increases accelerated in the third quarter of 2022, led by increased construction costs, according to new data released by the Central Bank.

According to the data also presented in StatWatch , the Central Bank of Cyprus (CBC) House Price Index (CPI) (houses and apartments) continued to record an upward trend during the third quarter of 2022, registering an increase of 2.1% compared to up 1.7% on the previous quarter.

On a year-on-year basis, the index saw a 6.3% increase compared to a 4.7% increase in the previous quarter.

As highlighted, the main factor for the acceleration in house price increases continues to be the increased construction costs, while at the same time the increase in demand in the real estate market seems to be contributing in the same direction.

For the second quarter in a row, the increase in the CPI concerns all provinces, both apartments and houses.

Real estate transactions in the first nine months of 2022, as recorded in the Lands and Surveys Department's sales document data, are showing accelerated growth, attributed to year-on-year increases in demand from both domestic and foreign investors.

The increase in the sales documents of foreign investors is mainly attributed to the Strategy for Attracting Companies to Activate and/or Expand their Activities in Cyprus (International Headquarters).

According to data from the Ministry of Energy, Trade and Industry, more than a thousand companies of foreign interests have registered in Cyprus as part of the International Headquarters in 2022.

Not affected by inflation

According to the Central Bank, inflationary pressures, which have a significant impact on construction costs, continue this quarter, but so far do not appear to be negatively affecting demand to a substantial extent.

The increase in borrowing costs due to the ECB's key interest rate hike appears to have weighed on mortgage demand in the third quarter of 2022, potentially weighing on future construction activity.

“It appears that the property market, despite continued high uncertainty due to geopolitical developments, is showing resilience, with the acceleration in house prices continuing this quarter.

This increase is mainly due, as in the previous quarters, to the increasing construction costs, and is reflected both in the prices of apartments and houses", it is pointed out.

Also, it is added, the increase in demand from both foreign and domestic investors, which is evident from the figures of the TKX, contributes positively to the price increases.

The small rise in lending rates that occurred in the third quarter of 2022 is noted to have so far not affected deposit rates, keeping the real estate market an attractive option, since real estate yields a higher return than deposits, through buy-to-let. lets).

It is noted that the demand for rental properties is constantly increasing due to the continued influx of foreigners to Cyprus who are looking for accommodation.

The most important impetus to the demand for real estate purchases by foreign investors seems to have been exerted by the descent of foreign professionals in the context of international headquarters.

The companies that were attracted as part of the international headquarters are mainly active in the financial services, shipping, technology, information and communication sectors and are mainly concentrated in Limassol and Paphos, while increased mobility has recently been observed in Larnaca as well.



3 February 2023