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Everything you need to know is included in our Cyprus Property Pack
Are you considering buying real estate in the land of Aphrodite? Are you wondering whether you should make a purchase now or in the future?
When it comes to market timing, people hold different beliefs. Your Cypriot friend may suggest that it's currently a good time to buy property, but your business partner in Nicosia might advise waiting for better opportunities.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Cyprus, we base our work on facts and data we can trust, not opinions or rumors.
We have carefully studied official reports and statistics from government websites, and we now have a trustworthy database with important information. Here's what we discovered, which can help you decide if it's a good idea to purchase real estate in Cyprus.
Let's get started!
How is the property market in Cyprus now?
Cyprus is widely recognized, today, as a stable country
Positive
Stability is a necessary condition when investing in real estate because it offers a solid foundation for property appreciation and returns on investment. It is an information you need as a foreigner looking to buy real estate in Cyprus.
Yes, Cyprus is a country with a stable environment. The last Fragile State Index reported for this country is 54.1, which is a highly satisfactory number.
Cyprus is widely recognized as a stable country today due to its robust economic recovery following the 2013 financial crisis, characterized by sustained GDP growth, a thriving tourism sector, and significant foreign investment. Additionally, its strategic location in the Eastern Mediterranean has fostered strong diplomatic relations and partnerships with both European Union member states and neighboring countries, enhancing its geopolitical stability.
Investing in this country rests on solid ground. Next, let's analyze the economic forecast.
Cyprus will keep growing in the next 5 years
Positive
Before buying real estate, check the economic viability of the country.
In accordance with IMF projections, Cyprus is set to conclude 2024 with a growth rate of 2.7%, which shows the country is on the right path. Regarding 2025, the experts say 2.9%.
Besides that, the economy will keep growing since Cyprus's economy is expected to increase by 13.2% during the next 5 years, resulting in an average GDP growth rate of 2.6%.
The expected sustainable growth rate in Cyprus indicates a stable and growing economy, which can lead to increased property values and rental demand, making real estate investments more profitable. Additionally, a healthy economy attracts more businesses and tourists, further boosting the real estate market's potential for returns.
In addition, there are other metrics to consider.
Cypriot business owners are a bit less confident when it comes to market conditions
Neutral
It's important to pay attention to the GDP forecast, but it's essential to remember that it's generated by a foreign institution, and thus doesn't provide any insights into how people in Cyprus perceive their own economy. Thankfully, in Cyprus there is a designated metric that is regularly reported. This doesn't apply to every country, so we're in luck.
The metric known as the Business Consumer Index (BCI) is obtained by evaluating business leaders' confidence in the present and future economic conditions through surveys and assessments.
According to The Global Economy's analysis, the Business Confidence Index is at 8 for Cyprus. It can be interpreted as a rather neutral score.
Nevertheless, upon closer scrutiny of the data, we uncover a potential negative development: the trend is heading downward. The BCI score, 12 months ago, was recorded at 10.
The current moderate level of business confidence in Cyprus alone doesn't provide sufficient information to determine whether it's the right time to invest in property in the country. Before making a decision, we need to consider additional data.
Cyprus is delivering less building permits
Neutral
The quantity of permits delivered for construction projects serves as a valuable indicator when determining whether it's a favorable time to buy property in a country. A surge in building permits being issued signifies a positive shift in the property market.
Unfortunately, the number of building permits delivered is decreasing in Cyprus.
Within the past year, according to Statistical Service of the Republic of Cyprus, the number of building permits delivered by the Cypriot municipalities fell by 2.8%, from 8,323 to 8,091 units.
This is definitely a negative signal. Let's look at more data.
One last important point to consider is that fewer building permits result in a reduced supply of properties. If this is the case, it is likely that housing prices will increase in Cyprus in 2025.
Stagnant property prices persist in Cyprus
Neutral
Cyprus's home prices have increased by 2.7% in 5 years according to Statistical Service of the Republic of Cyprus.
It means that if you had bought a villa in Limassol for $625,000 five years ago, then it would now be worth around $642,000.
These days still, property prices are neither really increasing or decreasing.
It's difficult to draw conclusions from this data point. Just because prices in Cyprus have remained stagnant in the past doesn't necessarily imply that they won't fluctuate in the future. We have to look at more data.
You can find a more detailed analysis of the real estate prices in our property pack for Cyprus.
Everything you need to know is included in our Cyprus Property Pack
Cyprus' population is growing and getting richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Cyprus, the average GDP per capita has changed by 8.8% over the last 5 years. It's a satisfactory number. Furthermore, the Cypriot population is growing (+11% in 5 years).
This means that, if you purchase a seaside villa in Paphos and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Cypriot cities like Nicosia, Limassol, or Larnaca in 2025.
Rental yields are extremely high in Cyprus
Positive
Rental yield is a popular way to measure real estate investments.
It's the annual rental income of a property divided by its price. For example, if a Cypriot property is purchased for €200,000 and generates €10,000 in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Cyprus offer gross rental yields ranging from 7.1% and 9.8%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Cyprus.
It's among the best in the world.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there will be a growth in the number of affluent tenants. Consequently, rental yields may increase in Cyprus in 2025.
Everything you need to know is included in our Cyprus Property Pack
In Cyprus, expect minimal inflationary effect
Neutral
Simply put, inflation is the persistent upward movement of prices.
It's when your typical plate of halloumi cheese in Nicosia costs 8 euros instead of 6 euros a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
As projected by the IMF, over the next 5 years, Cyprus will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Cyprus is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Cyprus then?
Time to conclude !
2025 could be an excellent time to consider buying property in Cyprus, primarily because the country is recognized for its stability. This stability is a crucial factor for investors, as it reduces the risks associated with property investments. When you invest in a stable country, you can have more confidence in the security of your investment and the potential for steady returns. Cyprus's reputation as a stable nation makes it an attractive destination for property buyers looking for a safe and reliable market.
Moreover, Cyprus's economy is on a promising growth trajectory, with an expected increase of 13.2% over the next five years, translating to an average GDP growth rate of 2.6%. This sustainable economic growth is a positive indicator for the real estate market, as it often leads to increased property values and higher rental demand. A thriving economy attracts more businesses and tourists, which can further enhance the potential for profitable real estate investments. As the economy grows, so does the opportunity for property owners to benefit from rising property values and rental income.
Interestingly, Cyprus is currently issuing fewer building permits, which means that the supply of new properties is limited. This stagnation in property prices, combined with a growing and increasingly affluent population, creates a favorable environment for property investors. As demand for housing increases due to population growth and rising wealth, property values are likely to appreciate. This scenario presents a unique opportunity for buyers to enter the market before prices potentially rise.
Additionally, Cyprus offers attractive rental yields, with gross rental yields ranging from 7.1% to 9.8%, according to Numbeo. These yields are quite appealing for investors looking to generate income from rental properties. Furthermore, the minimal inflationary effect expected in Cyprus means that the purchasing power of your investment is less likely to be eroded over time. All these factors combined make 2025 a potentially opportune time to invest in Cyprus's real estate market.
We hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Cyprus.
-Will real estate prices go up in Cyprus?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.