The preceding increase in the European Central Bank’s base interest rates and the cost of housing loans, along with the consequent decrease in demand for housing loans, does not seem to have significantly affected domestic real estate demand, which remains on an upward trajectory.
In its analysis of the housing price index announced by the Central Bank yesterday, it explains that the high demand from both local and foreign buyers keeps property prices high, especially apartment prices, in combination with limited supply in the market.
The Central Bank emphasizes that with construction costs stabilizing in 2023 after significant increases, the increases in housing prices are mainly driven by increased demand, along with restrained supply.
According to the report, “during the third quarter of 2023, housing prices continued their upward trend, primarily due to increased demand for properties, coming from both domestic and foreign buyers.
With domestic demand remaining at relatively high levels, despite the rise in housing interest rates and the subsequent decrease in housing loans, and with demand from foreigners recording significant increases mainly due to the headquartering policy, the number of property transactions continues to increase.
With construction material prices continuing to stabilize at the high levels recorded due to geopolitical developments and a reduction in new residential buildings for which building permits were approved, the increases in housing prices mainly reflect the significant rise in demand, in correlation with the restrained supply of residential buildings.”
The Central Bank’s analysis explains that demand from foreign buyers is mainly attributed to the headquartering policy, attracting foreign professionals from countries such as Israel, Ukraine, the United Kingdom, Lebanon, and Belarus, while demand from local buyers is due, among other factors, to investments for rental purposes (buy-to-let).
Apartment prices on a quarterly basis increased in all provinces except in free Famagusta, where a decrease was recorded.
Specifically, in Nicosia, prices increased by 1.5%, in Limassol by 4%, in Larnaca by 2.9%, in Paphos by 5.2%, and in Famagusta, there was a decrease of 1.7%.
On an annual basis, apartment prices increased in all provinces except Famagusta.
Specifically, in the third quarter of 2023, prices increased by 4.6% in Nicosia, by 14.9% in Limassol, by 13.4% in Larnaca, by 18.5% in Paphos, while Famagusta recorded a decrease of 1.8%, compared to the same quarter of 2022.
Housing prices on a quarterly basis increased in all provinces for the third consecutive quarter during the third quarter of 2023.
Specifically, in Nicosia, there was an increase of 0.7%, in Limassol by 2.9%, in Larnaca by 2.8%, in Paphos by 2.4%, and in Famagusta by 2.8%.
The relatively high rate of increase in housing prices in the coastal provinces seems to be driven by demand from foreign buyers and investors, mainly within the framework of the headquartering policy.