Analysis of the Property Market in Cyprus

The Cyprus property market continues to break records in 2021 because of three reasons – a better economic outlook, increased demand, and low mortgage rates. More and more people from the EU countries and businesses are moving to Cyprus, which is also driving this growth.

According to Cyprus Villas, the island saw maximum volume of home sales in the second quarter of 2021.

Total home sales in Limassol has gone up from 4766 to 11553, a growth of 142.4% compared to the same period last year. The sale of one-family apartments has also increased from 2688 to 4486, which is a 66.9% growth. House sales in Cyprus have increased by 240.1% from 2078 to 7067. Average prices for single-family homes in Cyprus increased from $ 380,000 to $ 500,000, up by 31.6%.

Growth by Region in Q1 2021

  • In Nicosia, the capital of Cyprus, apartment prices increased by 2.2%, but house prices fell slightly by 0.9%.
  • In Limassol, apartment prices increased by 3.4%, and home prices by 2.7%.
  • In Larnaca, apartment prices increased by 6%, house prices fell 0.8%.
  • In Paphos, prices for apartments and houses fell by 3% and 1.6%, respectively.
  • In Famagusta, apartment prices increased by 3.2%, and house prices fell slightly by 0.1%.

Cyprus House Price Index

The Cyprus property market has seen a lot of ups and downs. The island country witnessed a boom in the mid-2000s. House prices rose 22.06% in 2007 (17.46% adjusted for inflation) and 9.73% in 2008 (adjusted for inflation by 7.47%). However, according to the Central Bank of Cyprus (CBC), prices fell 30% (32.3% adjusted for inflation) from 2009 to 2016. The decline started in 2009 due to the global financial crisis.

House Prices in Cyprus, Annual Change (%)

Year Nominal Adjusted for inflation
2009 -1.86 -3.83
2010 -3.57 -5.13
2011 -4.96 -8.55
2012 -4.71 -5.75
2013 -8.50 -6.34
2014 -8.02 -6.68
2015 -1.82 -0.85
2016 -0.94 -0.69
2019 1.78 2.38
2020 2.51 0.80
2021 0.75 1.92

Sources: Central Bank of Cyprus, Global Property Guide.

The Cyprus housing market began to stabilize in the first quarter of 2017, boosted by a rising economy.

Between 2017 to 2019, housing prices across the country grew by an average of 2.2% annually (adjusted for inflation by 1.5%). Last year, house prices rose by 0.75% (1.92% adjusted for inflation) despite the pandemic.

Property Investing in Cyprus: The Pros and Cons

After a sharp drop last year due to the pandemic, the demand for real estate is now noticeably recovering. According to the Department of Land Resources and Research, in the first five months of 2021, the total volume of real estate sales in Cyprus increased by 36.2% YoY to 3,577 units.

Property Investments in the Big Cities

In Nicosia, 1,110 purchase and sale agreements were registered in January-May 2021, which is 70% more than a year earlier.

  • In Limassol, real estate sales increased by 48% to 1,086 units over the same period
  • In Larnaca, real estate sales increased by 25% to 566 units.
  • In Famagusta, sales contracts increased by 22% to 214 units.

Paphos is the only major Cypriot city, in which there is a moderate decline in sales due to weak demand from citizens of non-EU countries. Sales contracts fell by 2% to 601 units in January-May 2021.

Sales in the domestic market, which accounted for more than two thirds of total sales increased by 73% to 2,482 units in the first five months of 2021. On the contrary, real estate sales to foreigners fell by 8% to 1,095 units over the same period.

In 2019, real estate sales in Cyprus increased by 12.2% to 10366 units compared to the year before, which was the largest volume of sales since 2008. It was followed by an increase of 5.8% in 2018, 23.7% in 2017, 42.6% in 2016, 9.4% in 2015 and 20.2% in 2014.

However, given the isolation measures and travel restrictions around the world, total sales fell 23.1% to 7,968 units in 2020.

Properties for Rent in Cyprus

Experts disagree on the factors that affect the cost, demand, and rental rates for real estate in Cyprus in 2021.

However, most of them agree on what will negatively affect the prices for foreigners. Domestic demand will not have a significant impact on pricing.

  • Nicosia is now a good market as the city is less susceptible to the negative impact of the coronavirus pandemic. The prices fluctuate in Paphos as it is full of luxury villas and also in Limassol, which has many skyscrapers.
  • Larnaca is also a good market because the city is close to the international airport. Also, the opening of the first shopping center has given a boost to real estate growth.
  • There are also positive trends for Ayia Napa, where a new marina is being built.

Tenants and owners have realized that they need to work together and sometimes make concessions to achieve mutually beneficial goals.

According to RICS, the average gross yield of apartments in Cyprus in 2020 was 4.8% compared to 5% in 2019. Similarly, gross house yields were 2.5% in 2020, down slightly from 2.6% in 2019.

Rental Income in Cyprus

Nicosia and Limassol usually offer a higher rental income compared to other Cypriot cities.

Monthly rent in Cyprus for apartments decreased slightly by 0.6% during the year to the first quarter of 2021. On the other hand, house rents increased by 2.6% over the same period.

Monthly House Rent in Cyprus

In 2021, house rent has fallen in almost all major Cypriot cities.

  • In Nicosia, the capital of Cyprus, the rent for residential real estate is between 7 and 11 euros per sq. m.
  • In Limassol, it is between 16 and 35 euros per sq.m. in 2021 (20 to 40 euros per sq. m. last year).
  • In Larnaca, the rent has ranged from 6 to 10 euros per sq. m. this year. It was 8 to 10 euros per sq. m. in 2020.
  • In Paphos, last year, the rent was between 10 and 12 euros per sq.m. This year, it is from 8 to 14 euros per sq.m.
  • In Famagusta, the average rent is from 8 to 14 euros per sq.m. this year. Last year, it was between 10 and 12 euros per sq.m.

In Ayia Napa, a famous Mediterranean resort town on the southeastern coast of Cyprus, the monthly rent for apartments with one or two bedrooms’ ranges from 800 to 1500 euros. Villas with three or four bedrooms can be rented at 2000 to 5000 euros per month.

Analysis of Property Prices in Cyprus

Landlords and tenants both have two worries. How the real estate market will be affected by the coronavirus pandemic and the cancellation of the citizenship by investment program?

Many owners are in a hurry to transfer their assets from a short-term lease to a long-term one. As a result, there are many more properties in the market now. Which means, the rental price will soon fall.

In some cities, real estate prices will remain stable in 2021, while in others they will decrease or rise.

Limassol – Experts have predicted that the prices in Limassol will almost return to the level of 2018. This means, it will be around 3,000 to 4,500 euros per m2. Compared to 2020, the minimum selling price per square meter in 2021 will decrease from 3,500 euros to 3,000 euros. On the other hand, the maximum selling price per square meter will increase from 4,000 euros to 4,500 euros.

Nicosia – The forecasts are impressive. According to experts, prices in the capital will return to the 2014-2015 level. The minimum selling price per m2 will fall to 1,900 euros (in 2021, the average price is 2,000 euros), and the maximum will be 2,200 euros per m2.

Paphos – In Paphos, the average sale price of detached houses per m2 is around 2,500 euros compared to 2,800 euros in 2020. It has been predicted that the minimum selling price per m2 in 2021 will decrease from 2,800 euros to 2,500 euros, while the maximum selling price will increase from 3,000 euros to 3,600 euros. It is worth noting that the highest selling price per square meter was recorded in Paphos between 2017 and 2019. It was 4,200 euros per square meter.

Larnaca – No significant fluctuations are predicted in Larnaca. The average maximum selling price will remain at 2,700 euros per m2, as in 2020. The average minimum price per m2 will drop from 2,200 euros to 2,000 euros. In Larnaca, the highest selling price per square meter was recorded in 2018-2019. It was 4000 euros per m2.

Famagusta – In 2021, the prices will be at the same level as in Larnaca. It will be from 2000 to 2700 euros per m2 compared to 2300-2800 euros in 2020. The highest sale price per m2 was recorded in Famagusta in 2017-2019. It was 4,100 euros per m2.

Property Rental Prices in 2021

The average rent per m2 has gone down in 2021 compared to the last year in all the cities of Cyprus. One reason for this is the increased demand for property purchases.

Limassol – 2021: 16 to 35 euros; 2020: 20-40 euros

Nicosia – 2021: 7 to 11 euros; 2020: 8-10 euros

Larnaca – 2021: 6 to 10 euros; 2020: 8-10 euros

Famagusta – 2021: 8 to 14 euros; 2020: 10-12 euros

Paphos – 2021: 8 to 14 euros; 2020: 10-12 euros

A sharp drop in prices is expected in Paphos, Larnaca, Famagusta and Limassol. They have all been traditionally the most popular places for investors from Germany, the UK, the Gulf states, China and Russia in 2018 and 2019.

However, cancellation of the Cyprus investment program and COVID-19 has both directly affected supply and demand. This may make the Cyprus real estate market change dramatically.

New Homes & Developments in Cyprus

Construction sector in the country saw a high growth in November 2019. 707 building permits were issued compared to 597 in November 2018, an increase of 18.4% according to official data from the Statistical Service of Cyprus.

The total cost of these permits increased by 29.6% and amounted to 332.4 million euros. The total area increased by 46.6%. It was for 222.4 thousand square meters.

These permits allowed the construction of 909 new houses, which is 56.7% more than the 580 of November 2018.

November 2019 construction permits were issued for

  • Residential buildings – 492
  • Public residences – 1
  • Non-residential buildings – 122
  • Civil engineering projects – 36
  • Section of land plots – 42
  • Road construction – 14

Permission to build new houses – Permits issued in November 2019 allowed the construction of 909 new houses (residential buildings).

Out of this, 359 were individual houses, which is 17.3% more than the 306 units allowed in November 2018. 133 were for community buildings, including apartments, houses, townhouses, and other residential complexes. This is 35.7% more than the 98 approved in November 2018.

Permits Issued for New Houses – 2018 Vs. 2019

Month 2018 (Residential premises) 2019 (Residential premises) Increase % age changes
January 476 548 72 15%
February 431 576 145 34%
March 467 615 148 32%
April 418 742 324 77.5%
May 541 907 366 67.7%
June 506 812 306 60.5%
July 632 1028 306 62.7%
August 453 526 72 15.9%
September 576 1114 538 93.4%
October 617 744 127 20.6%
November 580 909 329 56.7%
RESULTS 5697 8520 2733 49.6%

351 new houses were in Limassol, 314 in Nicosia, 90 in Larnaca, 116 in Paphos and 38 in Famagusta.

Annual Construction Figures

In total, 6,571 construction permits were issued for January to November 2019, compared to 5,929 for the same period in 2018. The total value increased by 73.8% and their total area by 44.6%. The number of permits for the construction of new homes increased by 49.6%.

2,234 residential building permits were issued between January and November 2019 for the construction of 3,463 new houses in Limassol, 2,674 in Nicosia, 1,054 in Larnaca, 1,004 in Paphos and 325 in Famagusta.

Building permits are the main indicator of future activity in the construction sector.

Mortgage Interest Rate in Cyprus

The Central Bank of Cyprus has published statistics on the interest rate charged by monetary institutions in Cyprus on deposits and loans for the eurozone residents. Data has also been published on the monetary value of new loans in euros for January 2021. These reports are included in the February 2021 issue of Monetary and Financial Statistics.

Here are the main changes in interest rates on new deposits and loan contracts.

Deposit Rates

  • The interest rate on household deposits where the maturity is one year remained unchanged at 0.08%.
  • The interest rate on deposits made by non-financial corporations increased to 0.10% compared to 0.09% from last year.

Credit Rates

  • The consumer loan rate increased to 3.25% compared to 2.99% from last year.
  • The interest rate on loans for the purchase of housing decreased to 2.12% compared to 2.16%
  • The interest rate on loans for an amount of up to 1 million euros for non-financial corporations increased to 3.30% compared to 3.13%

New Loans

  • The total volume of new loans decreased to 208.0 million euros in January 2021 compared to 357.4 million euros from last year.

Categories of New Loans

  • New consumption loans decreased to 11.6 million euros compared to 20.3 million euros of last year.
  • Loans for the purchase of housing decreased to 76.1 million euros from the 111.0 million euros of last year.
  • New loans to non-financial corporations up to 1 million euros decreased to 49.4 million euros from 54.6 million euros last year.
  • New loans to non-financial corporations for more than 1 million euros fell to 61.7 million euros from 158.2 million euros last year.

Impressive Economic Growth in Cyprus

The gradual lifting of Covid-19 restrictions has given consumers a new confidence. They are spending more, which has given the economy a boost.

According to preliminary estimates of the Statistical Service of Cyprus, the economy grew by 12.8% in the second quarter of 2021, which is much higher than what was originally expected.

Sectors like hotels, restaurants, warehousing, communications, wholesale and retail trade, entertainment, art and other activities have all grown. Tourism, both internal and external, have also played a crucial role.

Car registrations, trips, and imports have all gone up by 1.5%, 201.6%, and 9.6% respectively. Exports have dropped by 14.5%. There is also an improvement in the real estate sector. Real estate sales have increased by 31%.

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