Cyprus real estate market faces a slowdown

The Central Bank of Cyprus (CBC) has reported a deceleration in the House Price Index (HPI) for houses and apartments in the first quarter of the year 2024. This trend is anticipated to continue, attributed to a significant slowdown in sales documents, which has yet to impact on the index.

According to the CBC, several factors are contributing to this slowdown. There is a normalisation in real estate demand, indicated by a marginal increase in the number of sales documents.

Additionally, there’s an uptick in supply, with more homes available for rent and sale. Coupled with this are rising lending rates for home purchases and only slight reductions in construction material costs, which remain high.

Quarterly, the HPI for homes and apartments rose by 1.6 per cent in the first quarter of 2024, down from a 2.3 per cent increase in the previous quarter. This rise was driven by a 0.8 per cent increase in house prices and a 3.4 per cent increase in apartment prices, the CBC stated.

Annually, house prices in Q1 2024 saw a 7.8 per cent increase, compared to an 8.3 per cent rise in Q4 2023. Apartment prices surged by 13.9 per cent, while house prices increased by 4.7 per cent during the same period.

Regionally, residential prices on a quarterly basis saw significant increases in Paphos and Famagusta, at 3.1 per cent and 4.4 per cent, respectively.

Conversely, Nicosia, Limassol, and Larnaca experienced slower increases of 0.2 per cent, 1.5 per cent, and 2.2 per cent, respectively.

In terms of annual changes by province, Paphos and Famagusta again led with increases of 11.2 per cent and 11.8 per cent, respectively.

Meanwhile, Nicosia, Limassol, and Larnaca recorded slower increases of 4 per cent, 9.2 per cent, and 10.7 per cent, respectively.

Focusing on house prices by province on a quarterly basis, Paphos and Famagusta saw accelerated growth of 3.3 per cent and 2.6 per cent, respectively.

Limassol, Larnaca, and Nicosia showed slower growth, with increases of 0.3 per cent, 1.1 per cent, and no change, respectively.

Annually, only Paphos recorded an acceleration in house prices with a 7.1 per cent increase. The other areas saw a slowdown, with Nicosia, Limassol, Larnaca, and Famagusta reporting increases of 3.6 per cent, 3.9 per cent, 6.6 per cent, and 10.6 per cent, respectively.

For apartment prices, there was a quarterly slowdown in all provinces except Famagusta, where growth accelerated.

Nicosia’s apartment prices increased by 0.8 per cent, Limassol by 3.7 per cent, Larnaca by 4.3 per cent, Paphos by 3.5 per cent, and Famagusta by 10.7 per cent.

Annually, apartment prices surged in Limassol, Larnaca, and Famagusta by 16.5 per cent, 18.1 per cent, and 16.5 per cent, respectively.

However, Nicosia and Paphos saw slower increases of 5.1 per cent and 21.4 per cent, respectively.

Data from the land registry corroborates this slowdown, with sales documents for all property types showing a marginal year-on-year increase of 0.6 per cent in Q1 2024 (3,597 compared to 3,574 in Q1 2023). This reflects a relative stabilisation in overall property demand.

“This slowdown is not yet reflected in the HPI, which, because it is calculated on the basis of estimates of real estate market prices, incorporates developments in actual transactions with some time lag,” the CBC said.