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Cypriot Banking Stability: Ongoing Resilience Amid Geopolitical Uncertainty

Stable Non-performing Loan Ratio Under Pressure

The Central Bank of Cyprus confirmed a steady non-performing loan ratio of 5.5% as of the end of August 2025. This stability comes despite a backdrop of significant geopolitical disruptions, underscoring the sector’s robust financial foundation.

Improved Provision Coverage and Enhanced Credit Quality

By applying the European Banking Authority’s Risk Dashboard methodology, which encompasses loans and advances to Central Banks and Credit Institutions, the NPL ratio showed signs of improvement, declining to 2.8% from 2.9% over the previous month. Additionally, the coverage ratio of non-performing loans with provisions increased to 62.6%, up from 62.2% in July, illustrating a cautious yet proactive approach to risk management.

Diversified Lending Practices Amid Market Shifts

Total restructured loans reached €1.2 billion at the close of August 2025, with half of this sum (€0.6 billion) categorized as non-performing. In parallel, net new loans in Cyprus experienced a modest decline, as highlighted by the Central Bank of Cyprus. In a recent report, new loans in Cyprus fell by €18.5 million in October, primarily due to a deceleration in corporate credit activity. Nevertheless, housing and consumer loans have shown resilience, with housing lending reaching €117.5 million and consumer loans also gaining momentum.

Rising Interest Rates And Liquidity Advantages

Interest rates saw increases across key segments, with mortgage rates climbing to 3.73% and consumer loans to 6.88%. While Cyprus’s lending rates are in line with the Eurozone median, deposit rates remain comparatively low. The Central Bank of Cyprus attributes this discrepancy to the exceptional liquidity position of Cypriot banks, as evidenced by a liquidity coverage ratio of 329%—a competitive advantage in today’s challenging market environment.

Cyprus Residential Market Surpasses €2.5 Billion In 2025 With Apartments Leading the Way

Market Overview

In 2025, Cyprus’ newly built residential property market achieved a remarkable milestone, exceeding €2.5 billion. Data from Landbank Analytics indicates robust activity countrywide, with newly filed contracts reaching 7,819, including off-plan developments. This solid performance underscores the market’s resilience and dynamism across all districts.

Transaction Breakdown

The apartment sector clearly dominated the market, constituting 81.6% of transactions with 6,382 deals valued at €1.77 billion. In contrast, house sales represented a smaller segment, encompassing 1,437 transactions and generating €737.9 million. The record-high transaction was noted in Limassol, where an apartment sold for approximately €15.2 million, while the priciest house fetched roughly €6.2 million.

Regional Analysis

Nicosia: The capital recorded steady domestic demand with 2,171 new residential transactions. Apartments accounted for 1,836 deals generating €349.6 million, compared to 335 house transactions worth €105.5 million, anchoring Nicosia as a core market with average values of €190,000 for apartments and €315,000 for houses.

Limassol: As the island’s principal investment center, Limassol led overall activity with 2,207 transactions. Apartments dominated with 1,936 sales generating €824.1 million, while 271 house transactions added €157.9 million. The district enjoyed premium pricing, with apartments averaging over €425,000 and houses around €583,000.

Larnaca: This district maintained robust activity with a total of 2,020 transactions. The apartment segment realized 1,770 transactions worth €353 million, and houses contributed 250 deals valued at €96.3 million. Average prices hovered near €200,000 for apartments and €385,000 for houses, positioning Larnaca within the mid-market bracket.

Paphos: With a more balanced mix, Paphos completed 1,078 transactions. Ranking second in overall value at €503.2 million, the district saw house sales generate €287.8 million and apartments €215.4 million. Consequently, Paphos achieved the highest average house price at approximately €710,000 and an apartment average of €320,000, emphasizing its premium housing profile.

Famagusta: Distinguished by lower transaction volumes, Famagusta was the sole district where house sales outnumbered apartment deals. Out of 343 transactions, 176 involved houses (yielding €90.4 million) and 167 were apartments (at €32.4 million). The segment’s average prices were about €194,000 for apartments and over €513,000 for houses, signaling its focus on holiday residences and coastal developments.

Sector Insights and Forward View

Commenting on the report, Landbank Group CEO Andreas Christophorides remarked that the analysis demonstrates an ecosystem where apartments are the cornerstone of the real estate market. He emphasized, “The apartment sector is not merely a trend; it is the engine powering the country’s real estate market.” Christophorides also highlighted the diverse regional dynamics: Limassol leads in apartment pricing, Paphos commands premium house prices, Nicosia remains pivotal to domestic demand, Larnaca sustains competitive activity, and Famagusta caters to holiday home buyers.

In a market characterized by these varied profiles, informed monitoring of regional and sector-specific dynamics is crucial for investors aiming to make targeted and strategic decisions.

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