The Cypriot residential property market continued its upward trend in the second quarter of 2025, with prices rising 4.7% annually. This growth was fueled almost entirely by a boom in apartment prices, which masked a significant slowdown in the market for houses, according to data released Friday by the Central Bank of Cyprus.
The Engine of Growth: Surging Demand
The Central Bank’s report highlights that real estate demand was exceptionally strong in Q2 2025. Data from the Department of Lands and Surveys (DLS) showed that total property sale contracts surged by 16.1% compared to the same period last year.
This robust demand was recorded from both market segments:
- Domestic Buyers: Sales to Cypriots increased by 15.1%.
- Foreign Buyers: Sales to international clients rose by 17.8%.
Limassol recorded the highest number of transactions (1,430), while in Paphos, foreign buyers dominated the market, accounting for 60% of all sales.
A Financial Catalyst: Cheaper Mortgages
This surge in market activity was significantly supported by more attractive financing conditions. The Central Bank noted that the average mortgage rate decreased to 3.85% in the second quarter, down from 4.58% in the same period of 2024.
This drop in borrowing costs, coupled with increased interest in obtaining loans, led to a 22.2% annual increase in the volume of new housing loans issued.
A Market of Two Tiers: Apartments vs. Houses
The 4.7% headline figure conceals a stark divergence between property types. The market’s growth is being driven by apartments, while the house market has cooled considerably.
- Apartment Prices: Recorded an accelerating annual increase of 5.3% and a strong quarterly jump of 3.1%.
- House Prices: Showed a much slower annual increase of 3.4% and a quarterly decline of -0.1%, indicating stagnation.
Regional Hotspots and Cool Downs
This split was also reflected across the island’s districts. Limassol was the only district to see its overall growth rate accelerate (up 6.8%).
In Nicosia, the market for houses saw a 1.6% annual decrease for the third consecutive quarter. In contrast, apartment prices in Larnaca and Limassol accelerated, rising by 8.2% and 4.8% respectively.
The Supply Response and Future Outlook
The construction industry is responding to the high demand. The number of residential units covered by building permits increased by 12.1% in the first four months of 2025, suggesting a gradual increase in housing supply is on the way.
Despite this, the Construction Materials Price Index remains at historically high levels. Looking ahead, the European Commission’s economic sentiment survey indicates that a smaller share of respondents expect property price increases in the next three months, suggesting a potential stabilization.
Source: Stockwatch.com.cy