Central Bank of Cyprus Reports Deceleration in House Price Index for Q1 2024

The Central Bank of Cyprus (CBC) has observed a deceleration in the House Price Index (HPI) for both houses and apartments in the first quarter of 2024. This trend is expected to persist, largely due to a significant slowdown in sales documents, which has yet to impact the index.

Several factors are contributing to this slowdown, according to the CBC. There is a normalization in real estate demand, as indicated by a slight increase in the number of sales documents. Additionally, there is an increase in supply, with more homes available for rent and sale. This situation is compounded by rising lending rates for home purchases and only slight reductions in construction material costs, which remain high.

On a quarterly basis, the HPI for homes and apartments rose by 1.6 percent in the first quarter of 2024, down from a 2.3 percent increase in the previous quarter. This increase was driven by a 0.8 percent rise in house prices and a 3.4 percent rise in apartment prices, according to the CBC.

Annually, house prices in Q1 2024 saw a 7.8 percent increase, compared to an 8.3 percent rise in Q4 2023. Apartment prices surged by 13.9 percent, while house prices increased by 4.7 percent during the same period.

Regionally, residential prices on a quarterly basis saw significant increases in Paphos and Famagusta, at 3.1 percent and 4.4 percent, respectively. Conversely, Nicosia, Limassol, and Larnaca experienced slower increases of 0.2 percent, 1.5 percent, and 2.2 percent, respectively.

In terms of annual changes by province, Paphos and Famagusta again led with increases of 11.2 percent and 11.8 percent, respectively. Meanwhile, Nicosia, Limassol, and Larnaca recorded slower increases of 4 percent, 9.2 percent, and 10.7 percent, respectively.

Focusing on house prices by province on a quarterly basis, Paphos and Famagusta saw accelerated growth of 3.3 percent and 2.6 percent, respectively. Limassol, Larnaca, and Nicosia showed slower growth, with increases of 0.3 percent, 1.1 percent, and no change, respectively.

Annually, only Paphos recorded an acceleration in house prices with a 7.1 percent increase. The other areas saw a slowdown, with Nicosia, Limassol, Larnaca, and Famagusta reporting increases of 3.6 percent, 3.9 percent, 6.6 percent, and 10.6 percent, respectively.

For apartment prices, there was a quarterly slowdown in all provinces except Famagusta, where growth accelerated. Nicosia’s apartment prices increased by 0.8 percent, Limassol by 3.7 percent, Larnaca by 4.3 percent, Paphos by 3.5 percent, and Famagusta by 10.7 percent.

Annually, apartment prices surged in Limassol, Larnaca, and Famagusta by 16.5 percent, 18.1 percent, and 16.5 percent, respectively. However, Nicosia and Paphos saw slower increases of 5.1 percent and 21.4 percent, respectively.

Data from the land registry corroborates this slowdown, with sales documents for all property types showing a marginal year-on-year increase of 0.6 percent in Q1 2024 (3,597 compared to 3,574 in Q1 2023). This reflects a relative stabilization in overall property demand.

"This slowdown is not yet reflected in the HPI, which, because it is calculated on the basis of estimates of real estate market prices, incorporates developments in actual transactions with some time lag," the CBC stated.

By fLEXI tEAM