The property market in Cyprus will continue to develop dynamically in the near future. However, do not expect everything to go smoothly, and strategic planning will be crucial in overcoming the difficulties that lie ahead.
This is the conclusion of local experts.
According to them, moderate growth can be expected for several years, as high interest rates will stabilise demand and many projects will be aimed at satisfying it, and nothing else. This trend is confirmed by the latest data from the Central Bank of Cyprus (CBK), which recently reported a slowdown in the House Price Index (HPI) for houses and apartments in the first quarter of 2024. In particular, the index points to a normalisation of demand for property in the island nation. This is also supported by the
a slight increase in the number of purchase and sale documents.
According to the quarterly data, the HPI for houses and apartments rose by 1.6 per cent in the first quarter of 2024. This increase was driven by a 0.8 percent rise in house prices and a 3.4 percent rise in apartment prices, the CBK said.
On an annual basis, house prices rose by 7.8 per cent in the first quarter of 2024, compared with an increase of 8.3 per cent in the same quarter of 2023. Flat prices rose by 13.9 per cent, while house prices increased by 4.7 per cent over the same period. There has also been an increase in supply, with more properties being rented and sold.
Cyprus experts say that foreign investment, stimulated by regional geopolitical tensions, will play an important role for the Cyprus property market in the coming years. Incidentally, the Cyprus residency programme known as the Golden Visa, which has been a significant driver of foreign investment, will continue to drive demand and house price growth.
At the same time, construction costs are expected to rise further. This will put pressure on local developers and local buyers. Many Cypriots are gradually being priced out of the market as high inflationary pressures, particularly in the energy sector, continue to erode citizens' disposable incomes, affecting their standard of living.
In general, market conditions in Cyprus are favourable to foreign investment. As a result, demand for property is high, particularly in regions such as Limassol, Paphos and Larnaca. This presents lucrative opportunities for local developers, despite the problem of rising construction costs.
In terms of rental properties, the market situation has become a nightmare for Cypriots, especially in Limassol and the capital Nicosia, where rental prices have proven to be inflated. The ever-increasing number of high-tech and fintech companies setting up in Cyprus, while boosting the economy, has made it difficult for locals looking for a place to rent.
In the medium term, i.e. over the next five years, Cyprus's housing market is expected to stabilise further as construction projects either already underway or initiated during the boom come on stream.
According to the island's statistical service, Cystat, the number of building permits issued in Cyprus rose by 8.3 per cent between January and April 2024 compared to the same period last year. Local authorities issued 2,545 permits in the first four months of 2024, compared to 2,351 in the same period last year.
The value of these permits increased by 8.9 per cent and the total area covered increased by 15.7 per cent. There was also a significant increase of 24.2% in the number of residential units planned.
In the long term, i.e. over the next ten years, growth will stabilise, domestic demand will increase and external demand will balance out.
Demographic changes, combined with regulatory changes such as changes in VAT rules, will lead to a shift in housing preferences. Demand for housing will be directed mainly towards smaller and more affordable properties. At the same time, changes in building regulations will force the construction sector in Cyprus to focus more on sustainable and environmentally friendly properties.