Residential property prices in Cyprus continued to rise in Q3 2021, primarily driven by apartment purchases, according to Residential Property Price Index released by the Central Bank of Cyprus (CBC).
The Index recorded a quarterly increase of 0.5% compared to 0.3% in the Q1 2021, while on an annual basis the index recorded an increase of 1.2% compared to 0.3% in the corresponding quarter of the previous year.
House prices in the third quarter decreased in many areas, both on a quarterly and annual basis, contrary to the increase in apartment prices.
Specifically, house prices decreased on an annual basis by 0.3%, while on a quarterly basis the prices recorded a small increase of 0.3% mainly due to increases in the Larnaca and Paphos districts. On the contrary, apartment prices increased by 1% on a quarterly basis and by 4.5% on an annual basis.
According to the CBC analysis, households seem to prefer apartments as their main residency due to the new realities in the market and specifically due to the subsidization of the interest rate for mortgages by the government and the increase in rental prices. The increase in the cost of construction materials continues to contribute to the increase of the price level, says CBC, since it is now apparent in all sectors of the construction activity. According to unofficial estimates by real estate market experts, the demand for real estate by foreign investors is stable and concerns real estates of lower value compared to previous years, due to the termination of Cyprus citizenship by investment program.
During the third quarter of 2021, residence prices increased on a quarterly basis in all districts except of Nicosia, where they remained stable. Specifically, an increase of 0.1% was recorded in Limassol, a 1.7% increase in Larnaca, 1.6% in Paphos and 0.6% in Famagusta.
On an annual basis residence prices increase in Limassol, Larnaca and Paphos while they decreased in the other districts. Specifically, in Limassol house prices increased by 2.9%, in Larnaca by 2.9% and in Paphos by 1%. On the contrary, in Nicosia and Famagusta prices continue their downward trend, showing a decrease of 1.2% and 0.7% respectively on an annual basis.
On a quarterly basis, house prices recorded increases in all districts except Nicosia and Limassol. Specifically, in Larnaca, Paphos and Famagusta the prices increased by 2.1%, 1.5% and 0.7%, respectively. Contrary, both in Nicosia and Limassol house prices fell by 0.3%. On an annual basis, house prices fell in all districts except Limassol and Larnaca where they rose by 2% and 2.1% respectively. House prices in Nicosia decreased by 3%, in Paphos by 0.2% and in Famagusta by 2.6%.
Apartment prices increased in all districts on a quarterly basis except of Famagusta, where they decreased by 0.2%. Specifically, in Nicosia they increased by 0.7%, in Limassol by 0.8%, in Larnaca by 0.7% and in by Paphos 1.7%. On an annual basis, apartment prices increased in all districts. In Nicosia the prices increased by 2.4%, in Limassol by 3.9%, in Larnaca by 5.5%, in Paphos by 3.6% and in Famagusta by 4.9%.
According to the CBC, the continuing increase in residence prices is mainly due to domestic demand. At the same time, according to unofficial estimates by real estate market experts, external demand is stabilizing, although it remains low and concerns lower value real estates. The demand from foreign investors may be due to the promotion of international headquartering for high-tech companies, as well as to the permanent residency program.
