Sales contracts for properties in Cyprus have hit a 15-year high in the second quarter of 2023, a recent Central Bank of Cyprus (CBC) report revealed on Thursday. This period not only saw a spike in sales agreements but also experienced substantial increases in residential property prices, both on a quarterly and annual basis.

• Property Prices: The CBC's Residential Property Price Index (RPPI) witnessed a growth of 1.5% in 2023's second quarter. This increase was spurred by a 0.7% rise in house prices and a more significant 3.1% escalation in apartment prices. Annually, residential prices rose by 7.4% in the same quarter, slightly down from the 7.7% increase in the first quarter.

• Buyer Trends: The bulk of property transactions was attributed to local buyers. However, the most notable yearly surge in sales contracts was from foreign purchasers, thanks in part to policies attracting headquarters and an influx of students and other investors.

• Demand vs. Supply: The CBC points to a robust demand coupled with a limited supply of new housing as key drivers of this price growth. This demand remains strong despite the European Central Bank's (ECB) hike in key interest rates and stricter loan conditions, which seemingly had little effect on domestic real estate demand.

• Quarterly Increases: All provinces saw a jump in residential property prices in 2023's second quarter, with increments ranging from 1.4% in Limassol to 2.7% in Larnaca and Paphos.

• Annual Growth: Year-on-year growth continued for the seventh straight quarter across all provinces. Notably, Limassol led the annual increase at 10.1%.

• House and Apartment Prices: Each province witnessed an uptick in house prices annually, with Limassol experiencing a slight quarterly drop. Apartment prices, conversely, increased in every province both quarterly and annually, with Paphos seeing a remarkable 16.3% annual rise.

• Sales Boost: The CBC report shows a 26.5% year-on-year increase in sales contracts during the second quarter of 2023, totaling 4,115 – a figure not seen in fifteen years. Foreign buyer sales surged by 38.5%, while local buyer transactions rose by 17.9%.

• Mortgage Changes: Post the ECB's rate hike, new housing loans fell by 2.9% year-on-year in the second quarter of 2023. The average mortgage interest rate also escalated to 4.28%, reflecting tighter funding criteria.

A potential indicator of future construction activity, the number of residential building permits issued saw a 13% decrease to 788 in April-May 2023 compared to the previous year, hinting at potential constraints in new housing supply.