Housing prices in Cyprus appear to have hit a ceiling after two years of rapid growth, with the market slowdown that began in 2024 continuing into the fourth quarter and expected to persist, according to Central Bank data.
The Central Bank’s housing price index bulletin, published yesterday, outlined several factors shaping the property market landscape, primarily driven by construction material costs, interest rates, and a slowdown in foreign property purchases.
“According to various indicators, the property sector appears to be recording a general slowdown in its upward trajectory, as reflected by the deceleration in the increase in the number of sale deeds, combined with increased supply (rise in availability of properties for rent and sale),” the Central Bank stated.
Factors constraining expansion in the property sector include construction material costs, which continue to remain at high levels, as well as borrowing costs, which remained relatively higher during the reporting period compared to the previous five years.
Another factor expected to pressure prices is the anticipated increase in housing unit supply. The Central Bank noted that the number of housing units for which building permits were approved by district recorded the largest increases in recent months in Larnaca and Limassol districts respectively.
This aligns with market participants’ estimates that housing stock will increase in these districts, which is expected to work as a counterbalance to upward price pressures from the demand side.
The general housing price index (houses and apartments) recorded a decelerating quarterly increase of 0.4% in the fourth quarter of 2024, compared to a 0.9% increase in the third quarter of 2024. This resulted from decelerating quarterly increases of 0.5% in house prices and 0.1% in apartment prices respectively.
On an annual basis, housing prices recorded a decelerating increase of 4.5% in the fourth quarter of 2024, compared to a 6.5% increase in the third quarter of 2024.
Apartment prices recorded a decelerating increase of 5.5% and house prices a decelerating increase of 4.6% during the quarter under review.
Districts presented varying patterns according to the Central Bank bulletin.
On an annual basis, Paphos recorded accelerating house price increases (14.7%), whilst Limassol and Famagusta recorded decelerations (5.1% and 7.8% respectively). Nicosia recorded a decrease (-0.4%), whilst Larnaca recorded a stable annual growth rate (6.1%).
Annual apartment prices showed decelerating increases across all districts. Specifically, Nicosia apartment prices increased 2.6%, Limassol 5.5%, Larnaca 8.7%, Paphos 12.1%, and Famagusta 14.2%.
The European Commission’s Economic Sentiment Indicator (December 2024) for property prices over the next three months confirms the trend of slowing housing prices, standing at significantly lower levels in the fourth quarter of 2024 (25.4) compared to the corresponding period last year (68).
This indicates significantly milder expectations from survey participants regarding potential increases in Cyprus property prices in the next quarter.
The Central Bank concluded that the increasing property supply and the slowdown in foreign property purchases contribute to this trend. A potential restraint in construction material prices is also expected to contribute to containing increases in residential property prices.
