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Last Updated: Jul 03, 2016

After seven long years of house price falls, Cyprus’ housing market is now showing some improvement, amidst recovering economy. House price falls are now decelerating. Property transactions are rising. Residential construction activity is also increasing.

These developments follow the 2015 passage of a "Trapped Buyers Law" to enable access to title deeds, a 2014 regulatory reform to ensure greater transparency, and measures to exempt buyers who buy during 2016 from all future capital gains taxes, and give them a 50% discount on Title Deeds transfer tax.

During 2015, the nationwide residential property price index dropped 1.8% but when adjusted for inflation, it actually increased slightly by 0.17%, based on figures released by the Central Bank of Cyprus. On a quarterly basis, residential property prices were unchanged in Q4 2015.

This was supported by figures released by the Royal Institution of Chartered Surveyors (RICS), which showed that house prices in Cyprus fell by 1.42% y-o-y in 2015, to an average of €372,714. Nationwide house prices also increased 0.56% during 2015 when adjusted for inflation. House prices fell 0.8% (-1.46% inflation-adjusted) q-o-q in Q4 2015.

During 2015:
  • Nicosia, Cyprus’ capital, house prices declined by 1.42% (increased 0.56% inflation-adjusted) to an average price of €372,714 (US$414,065)
  • Paphos house prices rose by 3.1% (5.7% inflation-adjusted) to an average price of €353,991 (US$393,265)
  • In Farmagusta-Paralimni, house prices remained unchanged at €320,916 (US$356,520) (increased 2.1% inflation-adjusted)
  • In Larnaca, house prices declined by 0.04% (increased 1.97% inflation-adjusted) to an average price of €277,222 (US$307,978)
  • In Limassol, house prices declined by 3.18% (-1.23% inflation-adjusted) to an average price of €304,105 (US$337,844)

Unsurprisingly apartment prices have followed house price movements. Paphos was the only district that saw a meager price increase of 0.14% (2.14% inflation-adjusted) y-o-y in 2015, to an average price of €96,545 (US$107,256). In contrast, Nicosia saw the biggest drop of all Cyprus districts, with the average apartment price falling by 2.97% (-1.02% inflation-adjusted) during 2015, to €105,254 (US$116,931). It was followed by Famagusta-Paralimni, with apartment prices falling by 2.45% (-0.5% inflation-adjusted), Limassol -2.41% (-0.46% inflation-adjusted), and Larnaca -1.08% (0.9% inflation-adjusted).

This across-the-board housing market improvement is largely driven by Cyprus’ recovering economy. In 2015, the economy grew by 1.6%, after annual declines of 2.5% in 2014, 5.9% in 2013, and 2.4% in 2012, according to the International Monetary Fund (IMF). The economy is projected to expand by 1.6% this year, and by another 2% in 2017.

Cyprus house pricesThe Cyprus real estate market has historically been divided into the major urban centres of Nicosia, Limassol and Larnaca, primarily driven by local demand; and the seaside resort areas of Paphos and Famagusta, which are mostly driven by foreign demand. The economic decline of recent years affected both areas.

The housing market is expected to continue to improve in the coming months, amidst continued economic recovery, improvements in the banking system, and increasing investor confidence due to the passing of new laws that offer tax incentives and protect homebuyers from frauds.

Analysis of Cyprus Residential Property Market »

Last Updated: Aug 29, 2016

Property prices. Property is not expensive in Cyprus, with prices around €1,300-1,600 per square metre (sq. m.). Smaller properties cost rather more per sq. m. than larger properties.

Property rents.  Apartments of 120 sq. m. cost around €500 per month to rent in Larnaca and Nicosia, and around €800 per month in Limassol.

If you are buying specifically with a view to renting out your property, Limassol appears to give you slightly higher yields.

Property returns.  Cyprus has not traditionally been a great location to be a landlord, because of moderate rental returns.  But while gross rental yields in Cyprus have remained steady over the years, they have fallen almost everywhere else as a result of the asset-inflationary effects of low interest rates.  Result: Cyprus now looks comparatively attractive as a place where buying prices are low, so that capital gains on property are conceivable. However, it is always extremely hard to forecast which locations international buyers will seize upon as attractive.

Property buying costs.  Round trip transaction costs on the purchase of old residential property in Cyprus are moderate, but VAT on new properties is high.  See our  Cyprus residential property Buying-Guide and Cyprus property transaction costs compared to the rest of Europe

Read Rental Yields  »

Last Updated: Apr 12, 2017

Rental Income: Rental income exceeding €19,500 is taxed at progressive rates. Standard deductions for income-generating expenses are deductible from the gross income.

Capital Gains: Capital gains realized from the sale of immovable property are taxed at 20%, with a lifetime exemption of 85,430 if the property was owner-occupied for at least 5 years.

Inheritance: There are no inheritance taxes or estate duties in Cyprus.

Residents: Residents are taxed on their worldwide income at progressive rates, from 0% to 35%.

Read Taxes and Costs  »

Last Updated: Apr 13, 2017

Total roundtrip transaction costs range from 7.60% to 16% of the purchase price. The buyer pays around of 4.60% to 11%, whereas the seller pays 3% to 5% for the agent’s commission.

The transfer tax rate ranges from 3% to 8%, depending on the purchase price of the property. If the property is in joint names, the property value is halved, leading to lower transfer fees.

Read Buying Guide  »

Last Updated: Jul 17, 2006

Cyprus beachfront propertiesRent Control: The rental market can be divided into two broad categories: Houses controlled by the Rent Control Law (1983), and the free market.

Foreigners are not covered by the provisions of the Rent Control Law, except the non-Citizen wife of a citizen of the Republic, and legal entities controlled by non-residents.

Tenant Eviction: Eviction of tenants is relatively difficult, especially in the case of ‘statutory tenants’ protected by the Rent Control Law. It takes an average of 360 days to evict a tenant.

Read Landlord and Tenant  »

Last Updated: Jul 03, 2016

Economy is now recovering, but enormous problems persist

Cyprus gdp inflationCyprus’ economy contracted about 2% in 2009, mainly due to the adverse impact of the global crisis. This was in sharp contrast to the robust annual average growth rate of 4.25% from 2004 to 2008. After registering anaemic growth rates of 1.4% in 2010 and 0.4% in 2011, the economy shrank again by 2.4% in 2012. The economy remained depressed in the following years, contracting by a huge 5.9% contraction in 2013 and by another 2.5% in 2014, based on IMF figures.

In 2015, the economy finally recovered with a GDP growth rate of 1.6%, driven mainly by domestic demand. Economic growth is expected to be 1.6% this year and 2% next year, according to the IMF.

Despite this improvement, Cyprus continues to face enormous economic problems. Non-performing loans (NPL) remain a key issue. NPLs amounted to €26.69 billion (US$29.65 billion), equivalent to 153% of GDP in 2015. Many NPLs are in the construction sector, consisting of about 18.4% of all NPLs last year. In April 2016, NPLs dropped 8% to €25.53 billion (US$28.36 billion) from the same period last year.

The public budget deficit dropped sharply to just 1% of GDP in 2015, from 8.9% of GDP last year, according to the European Commission. The country’s deficit is expected to fall further to just 0.4% of GDP this year.

Public debt remains high at 108.9% of GDP in 2015, slightly down from 108.2% of GDP in a year earlier. Public debt is expected to remain unchanged this year.

The country is still stuck in deflation. Consumer prices dropped 2.1% in May 2016 from a year earlier, according to the Statistical Service of Cyprus. Prices fell by 0.27% in 2014 and by another 1.54% in 2015.

Unemployment dropped slightly to 15.1% in 2015, from 16.1% in 2014 and 15.9% in 2013, according to the European Commission. Jobless rate is expected to decline to 13.4% this year and to 12.4% in 2017.

  • Moderate transaction costs
  • Rapid growth with EU membership
  • Moderate rental yields
  • Low effective rental income tax
  • Conflict divides island into 2
  • Pro-tenant rental market
Price (sq.m): €1,530 For a 120 sq. m. property, usually an apartment.
Rental Yield: 5.29% For a 120 sq. m. property, usually an apartment.
Rent/month: €810 For a 120 sq. m. property.
Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 10.23% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 20.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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