Cyprus property prices firm 0.3% in Q2, apartments draw demand

Residential property prices in Cyprus firmed 0.3 percent in the second quarter, slowing from an increase of 0.5 percent in the first three months of the year, according to the country's central bank.

Housing prices slipped 0.3 percent for the second quarter, bank data showed, but the price of apartments jumped 1.3 percent.

The increase seen in apartment prices reflects demand from local buyers who prefer smaller living quarters than foreign investors. Hikes in constructions costs have also helped lift prices, the bank said.

Building officials in Cyprus estimate that the cost of constructing a home has risen some 20 percent recently, with some builders refusing to complete contracts unless they are covered for the price hikes.

The higher costs are adding to upward price pressures in the housing market on the island as demand rebounds from pandemic lows.

Across Europe and the US, rising transport and metals costs seen this year are posing a threat to residential housing markets as the economic rebound triggers a building boom.

“Cypriots are investing more in smaller homes and apartments in all cities thus supporting these prices. This is partly attributed to the fact that part of the population's savings ends up in real estate, either for home ownership purposes or for investments,” the central bank said.

“At the same time, demand for real estate from foreign investors is shows signs of stabilization, as recorded in sale contracts, which is due to the investment promotion and the program for obtaining a permanent residence permit in Cyprus,” the bank added, citing market officials.