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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 offers, today, peace and stability to investors
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.
You’ll be glad to hear that Cyprus is seen as stable country for investors. The last Fragile State Index reported for this country is 56.9, which is a satisfactory number.
Cyprus is a member of the European Union and has a strong economy, making it an attractive destination for investors. Additionally, Cyprus has a long history of peaceful relations with its neighbours, providing a secure and stable environment for investors.
There is a secure base for investment in the country. It’s time to analyze the economic forecast.
Cyprus will keep growing in the next 5 years
Before buying real estate, check the economic viability of the country.
In accordance with IMF projections, Cyprus is set to conclude 2023 with a growth rate of 2.5%, which shows the country is on the right path. For 2024, the experts say 2.8%.
Besides that, the economy will keep growing since Cyprus’s economy is expected to increase by 12.9% during the next 5 years, resulting in an average GDP growth rate of 2.6%.
The expected sustainable growth rate in Cyprus is a good thing for someone who wants to invest in real estate in this country because it indicates a stable and growing economy, which leads to increased demand for housing and thus higher returns for investors. Additionally, it suggests a positive outlook for the future, providing investors with confidence in their investment.
In addition, there are other metrics to consider.
Cypriot business owners have a more favorable view of the economy
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 5 for Cyprus. It can be interpreted as a rather neutral score.
That’s really encouraging and the trend is upward: the BCI score, 12 months ago, was at -2.
The current score of business confidence in Cyprus alone doesn’t provide enough 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.
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Cyprus is delivering less building permits
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 2024.
Stagnant property prices persist in Cyprus
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 getting richer
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.
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.
Rental yields are extremely high in Cyprus
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 2024.
In Cyprus, expect moderate inflationary effect
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 10.6%, which gives us an average yearly increase of 2.1%.
This data means that Cyprus could face inflation in the near future, which would lead to an increase in prices. Consequently, purchasing a property could become more expensive. However, if you buy now, there is a chance that your investment will appreciate, allowing you to sell it at a higher value in the future.
Is it a good time to buy real estate in Cyprus then?
Time to conclude !
Undoubtedly, 2024 presents a highly promising opportunity for property investment in Cyprus, supported by a robust set of indicators that favorably tip the scales. The anticipated steady growth of Cyprus’s economy over the next five years sets a positive tone for potential investors. The optimistic sentiment among Cypriot business owners regarding the economy adds to the investment appeal, reflecting a conducive business environment.
Moreover, the increasing wealth of Cyprus’s population aligns with the investment landscape, potentially leading to higher housing demand and subsequent property value appreciation. A standout aspect in favor of property acquisition is the extremely high rental yields, which offer a potentially lucrative income stream for investors.
While neutral aspects such as peace, stability, and moderate inflation provide a solid foundation for investment, they are complemented by the overall positive indicators. Additionally, although the delivery of fewer building permits might indicate a potential slowdown in new property developments, the high rental yields and growth projections remain influential factors.
In summary, the synergy of Cyprus’s projected growth, optimistic business sentiment, wealth accumulation, high rental yields, and the backdrop of peace and stability make 2024 an exceptional year for property investment. Despite neutral elements, the positive and advantageous investment environment cements Cyprus’s appeal as a promising destination for investors seeking profitable real estate opportunities.
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.