The Cyprus property market is facing another wave of rising construction costs. Over the past two months, the price of building materials has increased by approximately 10%, while compared to figures from five years ago, the increase has now reached 35%. Industry experts warn that these higher costs are inevitably reflected in the final prices of apartments, houses, and commercial properties across the island.
Against the backdrop of sustained demand for housing, developers are being forced to revise the budgets of new projects, while buyers are increasingly confronted with higher prices in both the primary and secondary property markets.
Why Building Material Prices Are Rising
According to Stelios Gavriil, President of the Cyprus Federation of Building Contractors Associations, the main increase in costs began after the outbreak of the conflict in Ukraine and the subsequent energy crisis. However, pressure on the market continues to this day.
The situation is further complicated by instability in the Middle East, fluctuations in oil prices, and rising costs for industrial companies to comply with European Union environmental regulations. Basic materials such as steel, iron, and aluminium—which are essential for most construction projects—have seen particularly significant price increases.
Additional pressure comes from rising carbon emission allowance costs. Manufacturers incorporate these expenses into product prices, which ultimately affects the overall cost of construction.
Official figures confirm the trend. The Building Materials Price Index reached 120.67 points in April 2026, increasing by 0.64% compared to the previous month and by 1.38% year-on-year. During the first four months of the year, cumulative growth amounted to approximately 1%.
Property Market Continues to Grow
Despite rising construction costs, demand for real estate in Cyprus remains strong. Property sales continue to increase in many parts of the island. Larnaca, in particular, is demonstrating strong momentum, supported by infrastructure improvements and major investment projects. Steady growth is also being recorded in Nicosia, which remains one of the island’s most affordable housing markets for local residents and foreign investors.
Limassol continues to maintain its position as the country’s leading business hub and remains attractive to international investors despite high property prices. In Paphos, demand is being driven by buyers from the United Kingdom, Europe, and the Middle East.
Experts note that Cyprus remains an attractive real estate market thanks to its stable economy, European Union membership, and ongoing interest in the island as a destination for living, investment, and remote work.
Buyers Are Changing Their Preferences
Rising prices are forcing buyers to reconsider their housing priorities. While many families previously focused on spacious apartments and large homes, increasing attention is now being given to compact and functional properties.
Modern energy-efficient apartments are particularly popular. Although these properties typically come with a higher purchase price, buyers increasingly view them as a long-term investment. A high energy-efficiency rating, quality insulation, solar panels, and smart management systems can significantly reduce utility costs, which is becoming increasingly important amid rising electricity prices. In Cyprus’s hot climate, energy efficiency is no longer just an added benefit—it has become one of the key factors influencing property decisions.
Shortage of Skilled Workers Remains a Serious Problem
The construction sector is also facing additional pressure due to a shortage of qualified workers. In recent years, the industry has experienced an outflow of experienced professionals, resulting in lower productivity and higher operating costs for companies.
To address the issue, Cyprus has gradually expanded the recruitment of workers from third countries. Industry representatives consider this a necessary step to maintain construction activity and prevent an even sharper increase in project costs. Nevertheless, construction companies warn that workforce shortages remain one of the industry's biggest challenges for the coming years.
What to Expect from the Housing Market in the Coming Months
Specialists believe that throughout 2026, prices for newly built homes will continue to face upward pressure from rising construction costs. If material and energy prices remain high, developers will have little choice but to pass these additional expenses on to buyers through higher property prices.
At the same time, strong demand for real estate and a limited supply of high-quality housing continue to support the market. As a result, experts do not expect any significant decline in apartment and house prices in Cyprus in the near future. For buyers and investors, this may be another indication that the market remains in a growth phase, while modern energy-efficient properties continue to be among the most sought-after segments of Cypriot real estate.