The Cyprus property market posted strong growth in the first quarter of 2026, but a striking new trend is emerging within the sector. According to the Central Bank of Cyprus, apartment prices surged by 10.8% year-on-year, while house prices increased by just 3%. This divergence pushed the overall Residential Property Price Index up by 7.5%, although the market has become far more polarised than in previous years.
Experts attribute this growing divide to changing demand patterns. Buyers—particularly young families and foreign investors—are increasingly choosing more compact and affordable apartments in residential developments, while the detached housing segment, which requires higher purchase prices and more expensive maintenance, has experienced much slower growth.
Where Are Property Prices Rising the Fastest?
Regional price growth also varies considerably. Limassol (+9.1%) and Larnaca (+8.9%) recorded the strongest increases in the overall Residential Property Price Index, reinforcing their positions as Cyprus' leading investment destinations. Paphos followed with growth of 6.4%, Nicosia recorded 2.8%, while the free areas of Famagusta saw no annual change.
In the apartment segment, Larnaca (+11.7%) and Limassol (+10.7%) were the clear leaders, followed by Paphos (+6.4%), Nicosia (+3%), and the free areas of Famagusta (+1.3%). The long-term figures are even more striking: since 2010—the Central Bank's benchmark year—apartment prices across Cyprus have increased by an average of 27%, while in Limassol they have soared by 53%. This makes the coastal city one of the fastest-growing and most expensive residential markets in the Mediterranean.
Foreign Demand Remains the Main Driver
The Central Bank attributes the continued rise in property prices to several factors. The most significant is strong demand from foreign buyers, which continues to outpace demand from local residents. High construction costs are also contributing to upward pressure on prices, although housing supply is gradually beginning to increase.
Sales statistics confirm this trend. The total number of property sale contracts signed during the first quarter rose by 13.8% compared with the same period last year, reaching 4,709 transactions. Among foreign buyers, the increase was far more pronounced at 22.3%, while purchases by local buyers rose by just 8.1%. Limassol once again recorded the highest number of transactions, with 1,499 sales. Buyer profiles vary significantly by region: in Nicosia, 84% of purchases are made by Cypriots, whereas in Paphos, foreign buyers account for approximately three-quarters of the market.
What Happens to Prices Next?
The housing market is also benefiting from cheaper borrowing costs. The net volume of new mortgage lending increased by 24.5% over the year, reaching €353.6 million, while the average mortgage interest rate fell from 3.53% to 3.15% by March 2026 following the European Central Bank's monetary policy easing.
Supply is also beginning to respond to strong demand. The number of residential units granted planning permission during January and February 2026 increased by an impressive 79.2% year-on-year, while the total number of building permits issued rose by 48.8%. However, the construction sector continues to face significant challenges, with the costs of building materials and labour still rising. A shortage of skilled workers is also contributing to higher construction costs.
The market confidence index rose to 32.8 points, up from 24.6 a year earlier, indicating growing optimism that price growth—particularly in the apartment sector—will continue. Nevertheless, some analysts warn that the ongoing imbalance between supply and demand, combined with worsening housing affordability for local residents, could lead to a gradual stabilisation of the market during the second half of the year.