Residential property prices continue to rise

Residential property prices continued their upward trend in the second quarter of 2024, according to the latest price index released by the Central Bank.

During the second quarter of 2024, the Central Bank of Cyprus Residential Property Price Index (RPPI) for houses and apartments showed an annual increase.

Key highlights:

• Annual increase: Residential property prices rose by 8% in Q2 2024 compared to 7.8% in Q1 2024. Apartment prices rose by 12%, while house prices rose by 6.2%.
• Trends: The Apartment Price Index recorded a higher percentage increase compared to the House Price Index. However, there was a relative slowdown in growth on both a quarterly and annual basis.

Market dynamics

Several indicators suggest a general slowdown in the growth of the real estate sector. This trend is primarily driven by:

• A fall in the number of sale contracts, particularly in transaction volume and value for housing.
• An increase in housing supply (greater availability for rent and sale).
• High mortgage interest rates and only minor reductions in construction material costs.

Developments in the real estate market by district

Real estate market trends appear to vary by district:

• In Limassol and Nicosia, supply is increasing to meet existing demand.
• In Larnaca and Paphos, supply remains moderate while demand continues to rise.
• In Famagusta, supply is still relatively limited, with prices trending upward due to, among other factors, the entry of new residential units to the market.

Price changes by district

Quarterly trends (Q2 2024):

The general housing price indices showed:

• Faster increases in Limassol (1.8%) and Paphos (3.5%).
• Slower increases in Larnaca (2%) and Famagusta (1.2%).
• A steady rate of growth in Nicosia.

Annual trends (Q2 2024):

• Faster annual price increases were recorded in Limassol (9.5%) and Paphos (12.1%).
• Slower increases were noted in Nicosia (2.4%), Larnaca (9.9%), and Famagusta (10.9%).

House prices by district (quarterly basis):

• Prices accelerated in Limassol (3.3%), Larnaca (2.1%), and Paphos (3.7%).
• Prices slowed in Nicosia (-0.5%) and Famagusta (0.8%).

House prices by district (annual basis):

• Accelerated increases were recorded in Limassol (7.7%), Larnaca (7%), and Paphos (10.1%).
• Slowdowns were observed in Nicosia (-1.3%) and Famagusta (-9.4%).

Real estate demand and supply

Demand:

• According to the Department of Lands and Surveys (DLS), total sale contracts for all property types decreased annually in Q2 2024.
• Domestic buyer activity increased, while foreign buyer activity declined. Regional analysis revealed differing trends:
  • Decreases in sales were noted in Limassol, Paphos, and Famagusta.
  • Significant increases were recorded in Nicosia and Larnaca.

Supply:

• Statistics on approved building permits indicate an influx of new properties entering the market, supported by further reductions in construction material prices.
• DLS data on property sales showed Limassol leading in transaction volume, while Nicosia recorded the highest number of apartment transactions.