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Cyprus Housing Market Gains Momentum in Q1 2025: Robust Growth Across Districts

by THEFUTURE.TEAM

June 5, 2025

Robust Start Reflects Growing Investor Confidence

The Q1 2025 data released by Landbank Analytics underscores significant advancements in Cyprus’ residential property market. With a 24.8 percent year-on-year rise in contracts, off-plan and under-construction homes are experiencing surging demand. The sector recorded 1,368 contracts for new apartments and houses, setting a strong precedent for the rest of the year.

Dynamic Shifts in Transaction Volume and Value

The market witnessed a pronounced upswing in total transaction value, which climbed to €391 million from €299 million in the corresponding period of 2024. Apartment transactions, accounting for 1,109 units, registered a 22.7 percent increase and generated €272 million, marking a 23.1 percent year-on-year boost. Notably, house sales outpaced these gains with volume increasing by 34.9 percent to 259 units and transaction value soaring 52.6 percent to €119 million.

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District-Level Insights: Larnaca and Limassol in Focus

Regional performance varied markedly. In Nicosia, apartment sales reached 376 units – a 17.5 percent increase – with transaction value rising 18 percent to €72 million. Meanwhile, Limassol maintained its lead in value terms, with apartment sales climbing by 5.8 percent to 311 units, and their value surged 19.6 percent to €116 million, representing 42 percent of the national apartment market’s value. Conversely, Larnaca emerged as an outlier; apartment sales surged by 66.3 percent to 321 units, and house sales increased by 77.1 percent to 62 units, with respective transaction values appreciating substantially.

Emerging Trends Across Paphos And Famagusta

Paphos demonstrated robust momentum, particularly in the house segment, where sales increased by 58.1 percent to 68 units. The district saw its apartment values rise by 20 percent year-on-year to €24 million, while house transaction value jumped 88 percent to €47 million, broadening its share of national house sales. Conversely, Famagusta exhibited divergent behavior with apartment sales halving to 17 units, resulting in a 57.1 percent decline in value to €3 million. In contrast, house sales in the region grew 61.5 percent, both in volume and rising by 50 percent in value to €6 million.

Expert Analysis and Future Outlook

Landbank Group CEO Andreas Christophorides highlighted the market’s resilience, attributing the uptick partly to the easing of interest rates. He emphasized that while apartment sales have risen nearly 23 percent in both terms of volume and value, the remarkable surge in new house transactions is a key indicator of shifting dynamics across districts. Christophorides pointed to Larnaca as a burgeoning hub, demonstrating dramatic increases in both unit sales and transaction value. He also noted that Nicosia continues to appeal to investors targeting centrally located properties, and Limassol consistently upholds its reputation as a premium investment destination. In Paphos, the momentum in high-value house sales is largely driven by foreign buyers, further substantiating the region’s burgeoning appeal.

In Famagusta, a notable shift from apartments to houses may suggest an evolving consumer preference, potentially influenced by the district’s strong tourism profile. Overall, the resilience and growth observed in Q1 2025 signal an optimistic outlook for Cyprus’ residential property market as investor interest and regional dynamics continue to evolve.

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DBRS Warns Of Middle East Risks For Greek And Cypriot Banks’ Key Sector

Rising Geopolitical Risks And Economic Vulnerabilities

DBRS said rising geopolitical tensions in the Middle East increase risks for Greece and Cyprus, citing their exposure to shipping and tourism. The assessment highlights sector dependence as a key vulnerability in both economies.

Impact On Economic Activity And Banking Systems

Despite recent resilience in Cyprus, ongoing volatility is affecting economic activity and the banking sector. The report, titled “Middle East Tensions Heighten Risks for Greek and Cypriot Banks’ Shipping and Tourism Exposures,” compares risks across both countries and identifies areas of exposure.

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Tourism And Shipping: The Economic Double-Edged Sword

Tourism and shipping account for a larger share of economic activity in Cyprus and Greece than in most EU countries. In Cyprus, these sectors represent 6.6% of gross value added, compared with 7.3% in Greece and an EU average of 2.9%. Beyond direct activity, tourism supports transport and leisure services, influencing consumption and broader economic output. According to DBRS, banks in both countries have above-average exposure to these sectors, increasing credit risk in the event of a prolonged downturn.

Differentiated Exposure: Cyprus Versus Greece

Exposure differs between the two banking systems. Greek banks hold a larger share of internationally secured shipping loans, while Cypriot banks have greater exposure to tourism-related activity. This makes Cyprus more sensitive to changes in travel demand. Both systems maintain profitability and capital buffers that may support performance under pressure.

Economic Ripple Effects And Sectoral Vulnerabilities

A decline in tourism flows would affect small and medium-sized businesses, household income, and real estate values. These factors are linked to asset quality in Cypriot banks. Early indicators point to higher cancellation rates and weaker travel demand in Cyprus, reflecting its proximity to regional tensions. Greece may see a more limited short-term impact due to lower exposure and potential diversion of tourism demand from affected regions.

Maintaining Profitability In A Challenging Environment

Bank profitability in both countries remained above the EU average as of the fourth quarter of 2025. Capital levels in Cypriot banks remain strong, while Greek banks continue to align with broader European benchmarks. Asset quality has improved, with non-performing loan ratios in transportation and storage close to 0% in 2025, compared with an EU average of 2.3%. In lodging and food services, non-performing loans stood at 2.1% in Greece and 0.7% in Cyprus, both below the EU average of 5%.

Sectoral Exposure And Wider Banking Implications

Data from the European Banking Authority show that transportation and storage accounted for 19.8% of loans to non-financial corporations in Greece and 11.2% in Cyprus in 2025, compared with an EU average of 5.5%. Exposure to lodging and food services reached 11.1% in Greece and 21.2% in Cyprus, exceeding the EU average of 2.6%.