The number of sales contracts submitted in the Department of Land and Surveys reached a 15-year record high in the second quarter of 2023, according to data published by the Central Bank of Cyprus on Thursday. In addition, residential property prices in Cyprus continued recording significant increases, on a quarterly as well as annual level.
In 2023Q2, the Residential Property Price Index of CBC registered a 1.5% increase compared to a 2.1% increase in the previous quarter. According to the CBC, the increase comes from a 0.7% increase in house prices and a 3.1% increase in apartment prices.
On an annual basis, residential prices recorded an increase of 7.4% in the second quarter of 2023, compared to 7.7% in the first quarter of 2023, with apartment prices increasing by 10.1% and houses by 5.6%.
Local buyers made up the largest proportion of transactions, while the largest annual increase in sales contracts came from foreign buyers.
Increased demand, coupled with limited new housing supply, appear to be the most important factors contributing to RPPI growth in the second quarter of 2023, the CBC says. The increased demand from foreigners is mainly due to the “headquartering policy”, as well as the increased number of students and other investors in the real estate market, while the increased local demand seems to be mainly due to investments for the purpose of renting (buy-to-let).
In addition, the CBC reports that up to the second quarter of 2023, the European Central Bank’s (ECB) increase in key interest rates and the consequent reduction in mortgage loan demand do not appear to have affected domestic demand for real estate to a substantial extent, which continues to to remain on an upward trajectory.
Therefore, and with construction costs stabilising through 2023, increases in home prices are driven primarily by increased demand combined with limited supply, the CBC notes.
