In February, the residential property market in Cyprus recorded a 7% increase in sales compared to the same month last year. This growth was primarily driven by strong market performance in key regions, while some areas experienced notable declines.
Regional Highlights:
Limassol, Larnaca, and Nicosia emerged as the main hubs for property transactions, with each region seeing over 300 properties sold. In contrast, Famagusta and Paphos experienced downturns, with sales dropping by 25% and 10% respectively.
Leading Districts:
Larnaca: Registered the highest increase with a 36% rise in sales.
Nicosia: Saw a steady 13% growth.
Limassol: Despite a modest 5% growth, it remains a highly popular area among buyers.
Rising Costs and Local Impact:
Even with overall market growth, the rapid rise in property prices—fueled partly by foreign investment—has resulted in serious affordability challenges. Many young Cypriots and middle-income families are struggling to buy or rent homes, as housing expenses such as rent or mortgage payments often exceed 40% of a household’s income.
Economic Pressures:
The average property price in Cyprus stands at approximately €270,000, which is more than seven times the average annual income of around €38,000. This imbalance forces many residents to delay important life decisions, such as starting a family, pursuing higher education, or even accepting job offers, due to high living costs.
Policy Recommendations:
To mitigate the affordability crisis, several measures have been proposed:
Ban on Short-Term Rentals: The Cyprus Real Estate Agents Registration Board has recommended prohibiting short-term rentals to help stabilize the market.
Adjusting VAT Policies: The AKEL party is calling for the removal of the reduced 5% VAT rate for foreign buyers, a move aimed at supporting local families with limited incomes.
Maintaining Investor Confidence: Meanwhile, proposals to restrict short-term rentals have been rejected by the attorney general’s office, allowing investors to continue purchasing property without additional limitations.
Domestic Market Trends:
Sales among local buyers increased by 6% in February compared to the previous year. Larnaca experienced a remarkable surge of 64%, while Nicosia and Limassol recorded more modest gains of 8% and 1%, respectively. Over the first two months of 2025, domestic sales rose by 15% year-on-year, despite declines in regions like Famagusta and Paphos.
Foreign Buyer Activity:
Transactions involving foreign buyers—including both EU and non-EU nationals—grew by 8% in February 2025. Nicosia saw a significant 38% increase, with Paphos, Larnaca, and Limassol experiencing smaller yet positive gains.
Sales to EU Citizens: Increased by 31% in February and by 37% over the first two months of the year.
Sales to Non-EU Buyers: Remained largely unchanged, with minor fluctuations across different regions.
While the residential property market in Cyprus shows promising growth in certain regions, the rising costs driven by foreign investments continue to challenge housing affordability for local residents. Addressing these challenges will require a careful balance of market regulation and support for middle-income families, ensuring that Cyprus remains an accessible place to live for its citizens.
Text based on materials from www.news.cyprus-property-buyers.com, photo pixabay.com
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