Cyprus’s construction sector continues to show steady growth. According to the latest data from the Statistical Service of Cyprus, in the third quarter of 2025 construction output increased by 4.2% compared to the same period last year. This figure reflects the sector’s continued high level of activity, despite the overall rise in the cost of building materials and services.
The Construction Production Index reached 125.93 points, with the base year 2021 set at 100. The year-on-year increase in the index indicates an expansion in the volume of work in both the residential and commercial segments, supported by strong demand for real estate and infrastructure projects.
The quarterly Construction Production Index is a tool for monitoring short-term changes in construction activity. It is a volume indicator that approximates changes in value added at constant prices. Thus, it can be viewed as an indicator of the construction sector’s growth rate.
How construction prices are changing
Alongside rising volumes, producer prices in the construction industry are also increasing. In the third quarter of 2025, the relevant Index stood at 125.03 points, which means a 3.7% increase compared to the same period in 2024. At the same time, on a quarterly basis, compared to the second quarter of 2025, a slight decline in prices of about 1% was recorded.
Experts attribute this correction to a temporary stabilization of prices for certain building materials and the revision of contracts; however, overall costs in the sector remain elevated. This directly affects the cost of new projects and final real estate prices.
Recall that the Producer Price Index is an indicator of the average level of change in wholesale prices for raw materials, supplies, and intermediate goods at which national producers sell their products.
The Producer Price Index covers all stages of production: raw materials, intermediate stages, and finished goods, as well as all sectors. Thus, its main difference from the Consumer Price Index is that it covers only goods, not services, and at the wholesale level of their sale. A rise in the Producer Price Index may be a harbinger of another increase in real estate prices.
Results for the first nine months of 2025
Looking at the period from January to September 2025 as a whole, the picture remains clearly positive. Over nine months, the construction production index rose by 4.2% compared to the same period in 2024. At the same time, the producer price index increased even more noticeably — by 4.5%.
These data confirm that the rise in construction activity in Cyprus is not short-term but systemic. The sector continues to develop amid active housing construction, the implementation of government infrastructure programs, and interest from foreign investors.
What is behind the growth of the construction industry
In 2025, Cyprus’s construction sector is being supported by several factors at once. These include government projects in the affordable housing sphere, the development of tourism infrastructure, as well as continued demand for renting and buying real estate in major cities and coastal areas. The overall economic recovery also plays a role, stimulating investment in new developments.
At the same time, the rise in producer prices signals continued pressure on construction costs. This means that in the near term the market may face further increases in project costs, especially in the new-housing segment.
Thus, construction remains one of the key driving forces of the country’s economy, generating demand for labor, materials, and related services.