Recent data from the Central Bank of Cyprus highlights a divergent trend across the island’s property market. In the third quarter of 2024, Paphos and Famagusta emerged as the frontrunners in price increases, whereas Limassol and Nicosia are witnessing a slowdown in growth.
The House Price Index (HPI) recorded a quarterly uptick of 0.9%, a noticeable decline from the 1.6% observed in the previous quarter. When looking at year-over-year figures, prices have increased by 6.5%, down from 8% in the preceding period. This overall moderation is further reflected in the apartment sector, where annual growth dropped from 12% to 8.8%, while houses experienced a minor deceleration, adjusting from 6.2% to 6%.
The report reveals that market momentum is not uniform across Cyprus. Paphos and Famagusta recorded the highest annual gains, with Paphos rising by 11.8% and Famagusta by 11.1%. Conversely, regions like Limassol, Larnaca, and Nicosia experienced more modest increases, with annual hikes of 7.4%, 8.1%, and 2.7% respectively. On a quarterly scale, Famagusta saw a 3% increase, while Paphos rose by 2%, compared to 1.1% in Larnaca, 1% in Nicosia, and 0.9% in Limassol.
In the apartment segment, Famagusta led with a striking 19.2% annual increase, followed by Larnaca at 15.1% and Paphos at 14.4%. Limassol and Nicosia, on the other hand, displayed lower rates of growth.
A notable change is occurring in the buyer landscape. Domestic purchasers have stepped up, contributing to a 13.7% rise in transactions, while overall sales documents increased by 6.6% year-over-year. In contrast, the interest from foreign investors has slightly receded, with a 2.3% decline. Despite this, Limassol continues to dominate in transaction volumes, followed by Larnaca, Nicosia, Paphos, and Famagusta, with Paphos maintaining its appeal among international buyers relative to other districts.
Several elements are at play in moderating the price growth across the island:
Supply Adjustments: The deceleration in growth aligns with a significant 44.4% increase in approved residential building permits in the first half of 2024 compared to the same period last year. While regions like Limassol and Nicosia are expanding their supply to meet demand, areas like Larnaca and Paphos face a more constrained market.
Construction Costs: There has been a slight drop of 0.2% in the cost of construction materials, easing some pressure on developers.
Financing Conditions: Mortgage rates have edged up to 4.59%, and new lending has seen a 6.5% annual increase, reaching €270 million. Although lending criteria remain strict, there is an observable uptick in interest for new loans.
With the combined effects of increased property supply and a slight cooling in foreign demand, the overall upward pressure on house prices appears to be subsiding. Surveys conducted by the European Commission also indicate a more cautious outlook among buyers, with a lower house price expectations index compared to the previous year. This suggests that while property values will likely continue to rise, the rate of growth is expected to slow down, signaling a period of stabilization in the market.
The evolving dynamics across different regions of Cyprus demonstrate the complex interplay of local supply, demand, and economic factors that continue to shape the nation’s housing market.
Text based on materials from www.cyprus-mail.com, photo pixabay.com
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