Cyprus Property Market Sees 8.5% Price Growth Driven by Foreign Buyers in Q2 2026

The Cyprus residential property market continued its robust upward trend in the second quarter of 2026, buoyed by strong foreign demand and escalating construction costs. According to the Central Bank of Cyprus Residential Property Price Index (RPPI), overall property prices rose by 2.4% quarter-on-quarter and showed an 8.5% increase year-on-year.

Steady Climb in House and Apartment Prices

Both houses and apartments contributed to this growth, albeit at different rates. House prices grew by 2.5% over the quarter and 5.8% annually, while apartment prices increased by 1.3% quarterly and jumped 8.9% compared to last year. This divergence suggests varying dynamics between the segments, with apartments particularly attracting strong interest.

Regional Performance: Famagusta and Larnaca Lead

Price increases were recorded across all districts. Famagusta topped the yearly growth charts at 10%, closely followed by Larnaca at 9.8%, and Paphos with 9.6%. Limassol and Nicosia trailed with 7.8% and 5.7%, respectively. Interestingly, Limassol was the sole district where annual price growth showed a slight deceleration.

Apartment price increases were particularly noteworthy in Paphos, surging 18.5% year-on-year, signaling increased investor interest or stronger demand in this area. Famagusta and Nicosia also saw apartment prices rise, although growth slowed in Limassol and Larnaca.

Foreign Buyers Fuel Market Activity

Demand for properties surged, with sales contracts climbing 15.4% year-on-year to 5,298 in Q2 2026, as per Department of Lands and Surveys data. Foreign buyers were key contributors, increasing their purchases by 22.7% to 2,107 units, highlighting Cyprus’s ongoing appeal to international investors. Local buyers also stepped up, with an 11% rise to 3,191 transactions.

Limassol remains the busiest market in terms of sales with 1,765 contracts, followed by Larnaca (1,169), Nicosia (1,076), Paphos (1,073), and Famagusta (215). In Paphos, foreign buyers made up an impressive 66% of transactions, underscoring its status as a hotspot for overseas investment.

Mortgage Lending Supports Market Growth

Housing loans grew in tandem with sales activity, rising 14.2% year-on-year to €403.6 million. Despite the rising demand, mortgage interest rates edged slightly lower to an average of 3.23% in June 2026. Banks maintained tight lending criteria, suggesting cautious optimism in the market.

New Construction on the Rise, But Costs Remain High

Approved residential building permits jumped 63.7% during the first five months of 2026 compared to last year, reaching 8,978 units. This significant rise signals that developers are responding to the strong demand by boosting future supply. European Commission surveys also report ongoing positive construction activity.

However, the cost of construction continues to challenge the market. Prices of building materials increased by 2.4% year-on-year, influenced by geopolitical tensions disrupting supply chains. Labour shortages are also pushing construction wages above pre-pandemic levels, contributing to elevated overall building expenses.

Price Expectations Point to Continued Growth

The European Commission’s Business and Consumer Surveys from June 2026 show a dramatic jump in expectations for residential property prices, with the index soaring to 65.9, compared to just 22.2 a year earlier. This indicator suggests market participants anticipate continued upward momentum for property values in the near term.

Balancing Demand, Costs, and Supply in Cyprus Real Estate

In summary, the Cyprus residential property market in mid-2026 reflects a dynamic landscape of strong demand led by foreign buyers, rising prices, and expanding construction activity. While higher building costs and labour shortages present challenges, the surge in new housing permits offers a promising outlook for improved supply.

For buyers exploring options, properties ranging from affordable apartments to luxury villas remain available across key districts. Keeping an eye on the evolving market trends will be essential for making informed real estate decisions in Cyprus moving forward.

Stay updated with us at INDEX.cy – your trusted marketplace for honest insights into Cyprus real estate.