The property market in Cyprus experienced a decline during the second quarter of 2023, with properties sold reaching a total value of €1.52 billion, according to a report by the Cyprus Real Estate Agents Registration Council.
This figure marks a decrease compared to the previous two quarters, which each recorded property sales worth €1.7 billion. The market is showing signs of being impacted by increasing interest rates, soaring inflation, and the elevated cost of construction materials.
While acknowledging the resilience of the property market, Marinos Kineyirou, President of the council, highlighted the mounting challenges that should not be underestimated. He emphasized the significance of the real estate sector to the Cypriot economy and called for government support to sustain its momentum.
The report reveals that a total of 5,974 transactions took place during the second quarter, resulting in properties worth €1.52 billion being sold. This indicates a decline in both the value of properties sold and the volume of transactions compared to the first quarter of the year. However, when compared to the corresponding quarter in 2022, the transaction volume remains at similar levels, while the value of properties sold is significantly higher than the previous year's €1.2 billion.
In terms of district performance, Nicosia and Famagusta were the only regions that experienced an increase in property values during the second quarter compared to the first. Despite a decrease in the volume of sales transactions, Nicosia saw an increase in the value of properties sold, amounting to €299.8 million. In Famagusta, both the value (€59.7 million) and the volume of sales transactions (303) increased.
However, the property market in Limassol, Paphos, and Larnaca faced a decline during the second quarter. Limassol, in particular, saw a significant decrease of €200 million in the value of properties sold compared to the first quarter, resulting in a slowdown in the overall market performance. Paphos also experienced a decline in both the value and volume of sales transactions. In Larnaca, while the volume of transactions increased slightly, the value of properties sold was slightly lower.
In addition to the challenges in the property market, the construction sector in Cyprus is grappling with rising prices. The Statistical Service reported a 6.5% year-on-year increase in construction prices during the first quarter of 2023. However, there was a 1.3% decrease in prices on a quarter-on-quarter basis. This comes after the Producer Price Index for Construction reached a historic high in the fourth quarter of 2022.
Despite the increase in prices, construction production saw a significant rise of 5.5% in the first quarter of 2023 compared to the same period last year. Building production experienced a 6.2% increase, while civil engineering projects saw a 0.7% increase.
The property market in Cyprus is facing challenges due to the impact of rising interest rates, inflation, and construction costs. The government is urged to provide support to sustain the momentum of the real estate sector. The rising construction prices and fluctuating property market dynamics highlight the complex landscape that both buyers and sellers are navigating in Cyprus.
By fLEXI tEAM