The Central Bank of Cyprus expects a gradual slowdown in the pace of property price increases, according to its December Economic Bulletin.
Weaker short-term price expectations
The Central Bank notes that the property price expectations index for the next three months, published through the European Commission’s Business and Consumer Surveys, stood at significantly lower levels during the first ten months of 2025 compared with the same period in 2024. This trend reflects more subdued expectations for continued rises in property prices.
At the same time, the Bank cautions that any slowdown is likely to be gradual. In recent months, the expectations index has stabilised, a development that aligns with the steady annual growth recorded in the general house price index during the first three quarters of 2025.
Demand remains resilient
Despite softer expectations on prices, the property market continues to show positive dynamics on the demand side, driven by both domestic and foreign buyers.
During the first ten months of 2025, demand for property, as reflected in the number of sale contracts filed with the Department of Lands and Surveys, remained at elevated levels. Transactions increased at an accelerated annual rate of 14.4%, with growth recorded among both local and overseas purchasers.
Supply picking up gradually
On the supply side, provisional data from the Statistical Service of Cyprus indicate a moderate increase in construction activity. The number of residential units granted building permits, a leading indicator of future supply, rose by 4.6% between January and July 2025 compared with the same period in 2024, increasing from 7,772 to 8,128 units.
The Central Bank links the gradual expansion in housing supply partly to government initiatives, including the Renovate and Rent scheme and the Build to Rent programme on private land.
According to the Bank, the combination of sustained demand and a gradual rise in approved building permits has contributed to a relative stabilisation of house prices during the first three quarters of 2025.
Price trends by property type
In the third quarter of 2025, residential property prices in Cyprus recorded an annual increase of 5%, following a rise of 4.7% in the second quarter, based on the Central Bank’s property price index.
The data show a faster increase in apartment prices, up 6.4% year on year, while house prices rose at a slower pace of 2.6%. This divergence reflects a shift in buyer preferences towards smaller properties, amid higher construction costs.
A broader slowdown in property price growth was also highlighted in data released on 9 January by the Statistical Service of Cyprus and Eurostat.
Construction costs and financing conditions
Construction costs have risen at a more moderate pace. The construction materials price index published by the Statistical Service recorded a modest annual increase of 1.3% over the first ten months of 2025.
At the same time, financing conditions continue to support the property market. Ongoing credit expansion in housing loans, combined with a gradual easing in interest rates on new mortgages, has underpinned activity.
New housing loans rose by 22% in the first ten months of 2025 compared with the same period in 2024, increasing from €892.9 million to €1.089 billion, according to the Central Bank’s Monetary and Financial Statistics. Over the same period, the weighted average interest rate on new housing loans fell to 3.07% in October 2025, down from 4.29% a year earlier.