The Cyprus real estate market in 2020 experienced a serious crisis due to the pandemic and a long lockdown. However, the fall was not so catastrophic.
Let's not forget that sales in 2019 turned out to be a record for the last ten years. The Department of Land Resources and Research registered 10,366 transactions: 4,482 objects were purchased by Cypriots, and 5,884 were purchased by foreigners. In 2020, the number of transactions decreased to 7,968 (4,983 on the local market, 2,985 on the external market). This is higher, for example, than in 2016 (7,063 transactions), and there were no global cataclysms then.
If the current sales rates are maintained, the Cyprus market will reach the level of 2018 already in 2021. Here is the data for eight months:
I am very surprised by the current situation on the market. If we evaluate the number of transactions, 2020 was frankly bad. Especially in Cyprus, where the closure of the passport program delayed some of the deals. Of course, there was still hope, because Cypriots always come up with something, whish was the case both during the mortgage crisis and after the bank cut. But I didn't expect anything from 2021 globally, so when I came here, I literally cheered up.
I talked a lot with developers. Summary: construction is underway. The closure of the citizenship program did not affect everyone, here are enough companies that have never been focused on the citizenship program. Those who were guided, adapted the projects. Although it is difficult for many to change everyone is used to working with large sums and they do not want to focus on a budget of one hundred thousand. But it is necessary to rebuild.
The third category of developers says this: "We have already built a box of a villa or a duplex block, we are ready to sell almost at cost, and we will get a profit with the further development of the project".
According to the Central Bank of Cyprus (CBC), during the year up to the first quarter of 2021, the national residential real estate price index increased slightly by 0.91% (1.64% adjusted for inflation).
The construction industry recovered quickly in 2021. In the first four months of 2021, the number of construction permits increased by about 45%. The number of commissioned facilities increased by almost 50%, to 3,353 units in January-April 2021.
Over the past 20 years, we have repeatedly observed peaks in demand and serious downturns in Cyprus. In the mid-2000s, during the tourist boom and high demand from Russians, prices rose rapidly. For example, in 2007, housing prices grew by 22.06% (17.46% adjusted for inflation) and by 9.73% (adjusted for inflation by 7.47%) in 2008.
The largest number of transactions (21,245) was also recorded in 2007. Largely due to affordable mortgage lending programs that extended to foreign buyers.
But from 2009 to 2016, according to the CBC, prices fell by 30% (32.3% adjusted for inflation). The lowest number of transactions was recorded in 2013 – only 3,767.
Of course, even now something has fallen in price, and buyers are using this time in their own interests. An example from my practice: last year the house cost €450,000, this year it is being sold for €390,000.
Sales are low in the economy class sector. For example, there are no new offers on the secondary market in Paphos, and all the old ones are bought up, and mostly by local residents. The market from €300,000 to a million, on the contrary, is cheerful, there are many interesting projects.
As for luxury real estate, which was previously purchased under the passport program, there is a demand for them too, but people make decisions slower. The passport option is still not enough. The most active ones are those who already live in Cyprus and have citizenship. And this is understandable: when a person has spent two million, they become attached to the place and want to continue investing.
In general, changes are taking place, but they are not as dynamic as they were in the previous crisis years. I repeat: it would be possible to assume that the pandemic and cancellation of the passport program will cause a very significant blow to the Cyprus market. But no. Even the indicators of 2020 are much better than the results of 2013-2015.
The recovery happens primarily due to the domestic market, whoich is activity fueled by state subsidies for the purchase of budget housing. In the first half of 2021, 68% of transactions were made by Cypriots themselves. By the way, foreigners with permanent residence in Cyprus can also use state support.
The demand for resorts has not yet recovered: tourist activity is still low. In the first half of 2021, 340,984 tourists came to Cyprus – 33.4% more than in 2020, and 79.1% less (!) than in the first half of 2019.
Life has not fully recovered yet, although it's not that there are no people on the streets... When you visit a good restaurant in the evening, there will be no place to sit, although there are ads everywhere about the maximum number of possible seats. Beaches are full with mostly Russian-speaking people. What is really noticeable is that there are fewer rental cars on the streets.
Testing rules are very strict testing rules. PCR on arrival is valid for three days, then you need to take a new one. As soon as the old one ends, you may, for example, not be allowed into the store. This is exactly what happened to me: the test expired just a few minutes before my visit to the supermarket.
Cypriots react very nervously to the crisis and afraid of a repeat, especially of a long lockdown. People were isolated for a long time, children did not go to school. In general, the restrictions were tough, and if many people liked working remotely in other places, there is no mood for it in Cyprus at all.
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