The Central Bank of Cyprus (CBC) reported that the General House Price Index, which encompasses both houses and apartments, experienced a slower annual growth rate in the third quarter of 2024. Notably, the Apartment Price Index decelerated more sharply than the House Price Index.

In this period, the House Price Index showed a quarterly growth of 0.9%, which is a decline from the 1.6% increase observed in the second quarter. Year-on-year, house prices grew by 6.5%, down from 8% in the previous quarter.

Apartment prices faced the most significant deceleration, increasing by 8.8% on an annual basis as opposed to the 12% surge registered in the last quarter. House prices also reflected a slight deceleration, with a 6% rise compared to 6.2% from the prior quarter.

Local Buyers Boost Demand

Interest from local buyers surged, while foreign investor purchases saw a slight decrease. The total number of sales contracts amounted to 4,081, representing a 6.6% annual rise. Transactions by local buyers increased by 13.7%, whereas foreign investor purchases declined by 2.3%.

Most property transactions were concentrated in Limassol, followed by Larnaca, Nicosia, Paphos, and Famagusta. Notably, Paphos continued to be the top choice for foreign buyers, whereas local buyers predominantly opted for properties in other districts.

Variations in House Price Trends Across Districts

The trends in property prices varied across different districts. On a quarterly basis, house prices saw these increases:

– 1% in Nicosia
– 3% in Famagusta
– 9% in Limassol
– 1% in Larnaca
– 2% in Paphos

Annually, Paphos (11.8%) and Famagusta (11.1%) led in price increases, with lower growth in Limassol (7.4%), Larnaca (8.1%), and Nicosia (2.7%).

For apartments, the highest annual price escalations occurred in:

– Famagusta (19.2%)
– Larnaca (15.1%)
– Paphos (14.4%)

Nicosia and Limassol experienced slower growth in apartment prices. These variations reflect local supply and demand dynamics. Limassol and Nicosia benefit from a larger inventory of new properties, while Larnaca and Paphos have a constrained supply, leading to price hikes. In Famagusta, limited availability, alongside new developments, has also driven price growth.

Factors Influencing the Market

Several market trends are shaping property prices:

– **Increased Development**: The approval of residential units for construction rose by 4% in the first half of 2024 compared to the same timeframe in 2023.

– **Construction Costs**: The price of building materials decreased slightly by 2% year-on-year.

– **Mortgage Rates**: Housing loan interest rates stood at 59% in the third quarter, marginally higher than in the preceding quarter.

– **Mortgage Lending**: New mortgage lending increased by 5%, reaching €270 million, as banks adhere to strict lending criteria.

Market Outlook

Expectations indicate that the slower pace of price increases will likely persist in the upcoming months. The availability of more properties, coupled with a reduced demand from foreign buyers, is contributing to a stabilization in prices.

Research from the European Commission suggests that projections for future property price growth are more conservative compared to 2023. Both buyers and investors are adopting a more cautious stance, pointing towards a period of market stability. Although prices are expected to continue rising, they will likely do so at a more measured pace as supply expands and demand becomes more balanced.