Cyprus Real Estate Market Analysis 2022

Cyprus’ housing market remains buoyant, mainly driven by strong domestic demand, coupled with returning foreign investors.

During the year to Q1 2022, the nationwide residential property price index rose by a modest 3.2%, following y-o-y increases of 2.6% in Q4 2021, 1.2% in Q3, 0.3% in Q2 and 0.9% in Q1, based on figures from the Central Bank of Cyprus (CBC). However, in real terms, prices actually dropped 3.7%. The huge gap between the nominal and real figures is mainly attributed to surging inflation. In June 2022, nationwide inflation reached 9.6%, the highest level since December 1981.

Cyprus’ house price annual change

By district, during the year to Q1 2022:

  • Nicosia, Cyprus’ capital, apartment prices rose by 3.4% but house prices fell slightly by 0.2%.
  • In Limassol, apartment prices rose by 6.9%, and house prices increased by 2.1%.
  • In Larnaca, both apartment and house prices rose by 2.4% and 1.3%, respectively.
  • In Paphos, apartment prices rose strongly by 10.2% while house prices increased by a more modest 4%.
  • In Famagusta, apartment prices rose by a robust 8.3% while house prices increased by 2.4%.

After falling sharply in 2020 due to the pandemic, demand has started to bounce back remarkably last year. During 2021, total property sales in Cyprus soared by 30% y-o-y to 10,347 units, according to the Department of Lands & Surveys. The strong recovery in demand continued this year, with nationwide sales surging by 42.3% y-o-y to 5,090 units in the first five months of 2022.

Cyprus price index

However, residential construction activity is weakening again. In the first four months of 2022, the value of residential building permits fell slightly by 0.5% and 1.6% y-o-y, respectively. Dwellings authorized also declined by 7.4% y-o-y to 3,104 units in Jan-Apr 2022.

Overall, Cyprus’ real estate market is expected to remain stable during the remainder of the year, mainly driven by strong domestic demand, coupled with recovering tourism.

In the first five months of 2022, tourist arrivals totaled 849,058 people, sharply up from just 156,825 in the corresponding period of 2021 and 246,556 in the same period of 2020. However, it remains far below the record 1,121,361 tourists recorded in Jan-May 2019.

Nonresident property ownership overview

Foreigners can buy one home in Cyprus and are entitled to hold land freehold, but there is a maximum limit on land ownership of 3 donums (4,014 sq. m.).

The Cyprus real estate market has historically been divided into the major urban centers 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.

Read more in our Cyprus Buying Guide

A brief history of Cyprus’ housing market

Cyprus’ housing market has been on a roller-coaster ride. During a crazy boom in the mid-2000s built on tourist demand and Russian money, there were house price increases of 22.06% (17.46% inflation-adjusted) in 2007 and 9.73% (7.47% inflation-adjusted) in 2008. But then house prices fell by 30% (32.3% inflation-adjusted) from 2009 to 2016, beginning their decline in 2009 due to the global financial meltdown, according to figures from the Central Bank of Cyprus (CBC).


Year Nominal Inflation-adjusted
2009 -1.86 -3.83
2010 -3.57 -5.13
2011 -4.96 -8.55
2012 -4.71 -5.75
2013 -8.50 -6.34
2014 -8.02 -6.66
2015 -1.82 -0.85
2016 -0.94 -0.69
2017 1.78 2.38
2018 2.51 0.80
2019 2.16 1.44
2020 0.75 1.92
2021 2.63 -2.09
Sources: Central Bank of Cyprus, Global Property Guide

Cyprus’ housing market started to stabilize in Q1 2017, amidst an improving economy. Nationwide house prices rose by an average of 2.2% (1.5% inflation-adjusted) annually from 2017 to 2019.

Cyprus price index

In 2020 during the onset of the Covid-19 pandemic, house prices rose by a minuscule 0.75% (1.92% inflation-adjusted). Then last year, house prices increased by 2.6% but actually declined by 2.1% when adjusted for inflation.

Demand surging again, buoyed by both local and foreign buyers

After falling sharply in 2020 due to the pandemic, demand started to bounce back remarkably last year. During 2021, total property sales in Cyprus soared by 30% y-o-y to 10,347 units, according to the Department of Lands & Surveys. It was at par with the total sales of 10,366 units recorded in 2019 before the pandemic.

Cyprus property sales

The strong recovery in demand continued this year, buoyed by a surge in sales outside the capital city. In the first five months of 2022, nationwide sales surged 42.3% to 5,090 units compared to the same period last year.

By major urban centers:

  • Nicosia registered 1,114 sales contracts in Jan-May 2022, up slightly by 0.4% from a year earlier.
  • In Limassol, property sales were up by a huge 61.9% y-o-y to 1,758 units over the same period.
  • In Paphos, sales contracts soared by almost 80% y-o-y to 1,080 units.
  • In Larnaca, property sales rose by 58.3% y-o-y to 896 units.
  • In Famagusta, sales contracts rose by 13.1% y-o-y to 242 units.

Domestic sales, which accounted for almost two-thirds of total sales, rose by 18.3% y-o-y to 2,935 units in the first five months of 2022. Likewise, property sales to foreigners almost doubled to 2,155 units over the same period.

Strong interest from foreigners drove the country’s housing market recovery in recent years, predominantly from non-EU buyers. In fact, before the Covid-19 pandemic, property sales in Cyprus rose by 12.2% to 10,366 units in 2019 from a year earlier, the biggest sales total since 2008. It followed rises of 5.8% in 2018, 23.7% in 2017, 42.6% in 2016, 9.4% in 2015 and 20.2% in 2014.

However, with worldwide lockdown measures and travel restrictions, total sales dropped 23.1% to 7,968 units in 2020.

Rental yields rising; rents are more or less steady

Average gross yields for apartments in Cyprus stood at 4.97% in Q1 2022, up from 4.9% in the same quarter last year, and 4% five years ago, according to RICS. Likewise, gross yields for houses were 2.62% in Q1 2022, up from 2.5% in Q1 2021, and 2.1% five years ago.

Cyprus rental yields

Nicosia and Limassol usually offer higher gross rental yields as compared to other Cypriot cities.

Across Cyprus, monthly rents for apartments rose by 2% during 2021 from a year ago, according to consultancy firm Wire FS. On the other hand, house rents increased slightly by 0.4% over the same period.

Cyprus house monthly rent

Yet the major Cypriot cities showed wide variations in rents movements last year:

  • Nicosia, Cyprus’ capital, apartment rents rose by 6.3% during 2021 while house rents increased strongly by 9.9%, according to Wire FS. Currently, average rental rates for apartments or houses in the capital city range from €8 (US$8.2) to €10 (US$10.2) per square meter (sq. m.), based on figures from Danos and Associates.
  • In Limassol, the rental market remains weak, with apartment and house rents falling by 1.3% and 1.7%, respectively. Rents ranged from €6 (US$6.1) to €12 (US$12.3) per sq. m.
  • In Larnaca, rents for apartments rose by a modest 3.4% during 2021 and house rents increased by 4.7% over the same period. Rents ranged from €4 (US$4.1) to €5 (US$5.1) per sq. m. last year.
  • In Paphos, rents for apartments and houses fell by 2.8% and 3.7%, respectively, in 2021. Rents ranged from €4 (US$4.1) to €5 (US$5.1) per sq. m.
  • In Famagusta, average rents for apartments increased by 4.7% y-o-y in 2021 while house rents fell by 7.1% over the same period. Rents ranged from €4 (US$4.1) to €6 (US$6.1) per sq. m.

In Ayia Napa, a well-known Mediterranean resort town on the southeast coast of Cyprus, monthly rents for one- to two-bedroom apartments range from €800 (US$817) to €1,500 (US$1,532). Three- to four-bedroom villas can be rented for €2,000 (US$2,043) to €5,000 (US$5,106) per month.

Residential construction activity weakening

Residential construction in Cyprus showed remarkable improvement last year, after falling in 2020 due to pandemic-related restrictions. During 2021, the number of residential building permits rose by 16.2% y-o-y to 8,164 and total dwellings authorized increased by 13.1% to 10,506 units, according to the Cyprus Statistical Service.

Cyprus dwellings authorized

However, residential construction activity is noticeably weakening again in the first months of 2022, amidst global supply chain disruptions and surging inflation, coupled with the adverse impact of the Ukraine crisis. In the first four months of 2022:

  • No. of residential building permits: 2,511, down slightly by 0.5% from a year earlier
  • Area of residential building permits: 651,500 sq. m., down 6.7% from a year ago
  • Value of residential building permits: €748.2 million (US$764.08 million), down 1.6% from Jan-Apr 2021
  • Dwelling units authorized: 3,104 units, down 7.4% y-o-y

Dwelling stock in the country reached around 466,000 units early last year.

Mortgage interest rates remain low; key rate raised

Interest rates in Cyprus are low, following European Central Bank (ECB) key rates. As of May 2022, the following average housing loan rates applied in Cyprus:

  • Interest rate fixation (IRF) of up to 1 year: 1.6%, up from 1.3% in May 2021 and 1.22% in May 2020
  • IRF over 1 and up to 5 years: 1.66%, down from 1.69% a year ago and 1.81% two years earlier
  • IRF over 5 years: 2.06%, slightly up from 2.05% in May 2021 but down from 2.17% in May 2020

Variable-rate mortgages now account for about 98% of all housing loans in Cyprus.

Cyprus interest rates housing loans

However, in July 2022, the ECB raised its key interest rates for the first time in 11 years, in an effort to cool surging inflation in the eurozone. The interest rate on the main refinancing operations was raised more than expected to 0.5%, from an all-time low of 0.0%. The interest rates on the marginal lending facility and the deposit facility were also increased to 0.75% and 0.00%, respectively.

Residential mortgage loans continue to fall

Despite low-interest rates, total housing loans outstanding fell by 5.3% y-o-y to €8.91 billion (US$9.1 billion) in May 2022, following declines of 4.3% in 2021, 1.8% in 2020, 1.5% in 2019, 22.2% in 2018 and 4.3% in 2017, according to the Central Bank of Cyprus.

Cyprus housing loans

In May 2022, by residence of borrower:

  • Domestic residents: outstanding loans drawn fell by 3.8% y-o-y to €8.43 billion (US$8.61 billion)
  • Euro-area residents: down by 20.7% y-o-y to €28.4 million (US$29 million)
  • Non-euro area residents: down by 26.4% y-o-y to €447.5 million (US$457 million)

Housing loans outstanding have been falling since 2012 when Cyprus’ banking system collapsed amidst the global credit crunch.

From 29.1% of GDP in 2005, the mortgage market grew to about 91.3% of GDP in 2012. But it has contracted sharply since to 38.3% of GDP in 2021.

Home foreclosures moratorium extended again

In July 2022, lawmakers passed a law further extending a freeze on home foreclosures, despite objections from the government and the banking sector. This extends the current moratorium on repossessions from July 31 to October 31, 2022.

It is the latest in a series of such extensions, with the initial freeze dating back to August 2021.

The properties exempt from foreclosures include:

  • Primary residences valued at up to €350,000 (US$357,428)
  • Business premises with an annual turnover of up to €750,000 (US$765,917)
  • Agricultural land plots valued at up to €100,000 (US$102,122)

Cyprus’ property title deeds fiasco

Property frauds in Cyprus are a huge problem for expat homeowners, but also for developers, banks, and the government. Many buyers have lost their homes after the developer went bankrupt, despite having paid in full.

Developers tend to keep the title deeds, neglecting to inform house buyers that their title deeds will be withheld for an unspecified time, or that the land on which their property is built has been mortgaged by the developer.

Cyprus building permits

Between January 2005 and June 2008, a total of 37,769 overseas buyers purchased 29,949 properties for which Title Deeds had yet to be transferred, according to the Cyprus Department of Land Registry report published in October 2008. “Some cases have involved ‘double selling’ fraud whereby the developer sells a property to Party A, fails to lodge the contract with the Land Registry, and then sells it again to Party B (possibly for a higher price) but fails to reimburse Party A,” says Alan Waring, an international risk management consultant.

To resolve the scandal, a new directive on mortgage credit was adopted on January 28, 2014, by the Economic and Financial Affairs Council. The new law sets out conditions for ensuring professionalism amongst creditors and credit intermediaries; principles for marketing and advertising; obligations relating to pre-contractual information; requirements for information on the borrowing rate; and requirements to check the consumer’s creditworthiness; and disclosure obligations for the consumer.

The property title deeds fiasco however remains unresolved. According to the European Commission’s Post-Programme Surveillance Report of spring 2017, at the current rate of Title Deeds issuance, it would take about ten years to address the backlog of unissued Title Deeds, which already reached around 30,000.

“The currently dysfunctional Title Deeds issuance and transfer system is deterring potential investors and thus weighing on the liquidity of the property market,” said the European Commission. “Although some measures were taken to streamline the issuance of Title Deeds for new properties, no new measure was announced to provide for a sustainable system of transfer of Title Deeds.”

The Immovable Property Transfer and Mortgage Law (Amendment) (No. 10) of 2015, better known as the ‘Trapped Buyers’ Law or the ‘Hidden Mortgages’ Law, was passed to help property purchaser(s) to obtain a Title Deed if they cannot obtain one despite having fulfilled their contractual obligations to the vendor.

The following can apply for Title Deeds:

  • The buyer has yet to receive the Title Deed of the property he purchased
  • The vendor of the property, whether a private individual or a property development company
  • The lender who granted the loan to the property buyer
  • The mortgagee under the mortgage contract deposited at the Land Registry
  • The buyer who purchased the property thru assignment or vesting contract deposited at the Land Registry
  • The Director of the Department of Lands and Surveys ex officio

However, a court ruled in May 2017 that the new law is unconstitutional because it violates Article 26 of the Constitution, which affords individuals the right to enter freely into a contract. As such, the land registry suspended procedures, as the government contemplated its next move.

In July 2019, the government approved amendments seeking to improve the 2015 law to finally resolve the problem. The amendments ensure the involvement in the process of all three parties – buyer, lender, and seller – and afford the capacity of filing a substantiated objection and securing a court order within a defined timeframe to stop the transfer.

Then in April 2021, Congress voted for two amending laws, which allow all interested parties upon the consent of the registered owner of the property (the developer) to apply for the transfer of the property until December 31, 2021, regardless of the existence of the certificate of unauthorized works.

Cypriot economy projected to slow

In Q1 2022, Cyprus’ seasonally-adjusted economic growth stood at 5.6% from a year earlier, following y-o-y expansions of 5.9% in Q4 2022 and 5.8% in Q3 2022, primarily driven by strong household spending, according to the Statistical Service of the Republic of Cyprus (Cystat).

“The Cypriot economy surprised on the upside in the first quarter of 2022, mainly as a result of the faster-than-expected recovery of tourism and the continuing expansion of exports of other services, notably business services and IT,” said the European Commission.

Cyprus gdp inflation

Despite this, economic growth is projected to slow to 2.1% for the full year of 2022, following annual growth of 5.5% last year and a contraction of 5% in 2020 on the onset of the Covid-19 pandemic, based on forecasts by the International Monetary Fund (IMF). The European Commission (EC) is a bit more optimistic, expecting the Cypriot economy to grow by a modest 3.2% this year.

“The prospects for the [tourism] sector remain positive for the summer season, based on data on planned international flights and surveys on reservations for tourist accommodation, despite a sizeable loss of the historically important tourism from Russia,” said the European Commission. “However, weakening consumer confidence combined with soaring inflation and increasing interest rates are expected to result in a considerable slowing down of households’ consumption and investments in the second half of the year.”

Cyprus recorded a budget deficit equivalent to 1.8% of GDP in 2021, sharply down from 5.6% of GDP in 2020, mainly due to an impressive 16% increase in revenues, according to the Cyprus Statistical Service (Cystat). For comparison, the shortfall stood at €409.1 million (US$417.8 million) last year, from €1.21 billion (US$1.24 billion) in 2020.

Gross public debt fell to 103.6% of GDP in 2021, after rising to a record 115% of GDP in 2020. Yet it remains higher than the 91.1% of GDP registered in 2019 before the pandemic.

Cyprus unemployment

In June 2022, nationwide inflation reached 9.6%, up from 9.1% in the previous month and the highest level since December 1981, mainly driven by increases in housing and utilities prices and transport costs, according to Cystat. Inflation averaged 0.6% in the past ten years.

The seasonally-adjusted unemployment rate in Cyprus stood at 4.8% in May 2022, down from 5.1% in the previous month and 9% a year earlier, according to Eurostat. From an average of just 4.8% from 2000 to 2011, unemployment surged to an average of 11.3% from 2012 to 2021, based on figures from the IMF.