The Central Bank of Cyprus (CBC) says continued credit expansion in housing loans, combined with the gradual easing of interest rates on new mortgages, is helping to support the property market. The assessment follows the release of the residential property price index for the third quarter of 2025.
According to the CBC, new housing loans recorded a sharp annual increase of 22 percent between January and September 2025, rising to 972 million euros compared with 796.8 million euros in the same period of 2024. In the third quarter alone, new residential lending grew by 24 percent year-on-year.
The weighted average interest rate on new mortgages fell to 3.03 percent in September 2025, down from 4.27 percent a year earlier. The bank notes that this decline supports both stronger demand and a gradual rise in housing supply.
Separate data, not included in the quarterly index, show new housing loans reaching 1.1 billion euros in the first ten months of 2025, compared with 892.9 million euros in the same period of 2024, again marking an increase of 22 percent. In 2024, the comparative growth rate for new mortgages had been just 6.6 percent.
Total new bank lending across all categories surpassed 4 billion euros by the end of October, reaching a ten-year high. Lending to households and businesses posted double-digit growth, with business lending exceeding 50 percent year-on-year.
Banking Survey Points to Strong Demand
The October 2025 Bank Lending Survey reflects this momentum. Household demand for housing loans remained broadly unchanged in the third quarter compared with the previous one, while banks reported that lending criteria remained strict but stable. For the final quarter of 2025, banks expect an increase in net demand for housing loans, with lending criteria remaining unchanged, in line with the trend observed since early 2024.
Housing Supply Shows Signs of Recovery
On the supply side, the CBC highlights that the number of residential units receiving building permits, a key leading indicator of future construction activity, rose by 4.6 percent between January and July 2025. The total number of approved units increased from 7,772 in the corresponding months of 2024 to 8,128 this year.
More recent data published by the Statistical Service show an even stronger rise: residential units approved in the first eight months of 2025 increased by 14.6 percent year-on-year.
The CBC also points to European Commission economic sentiment surveys, where the construction activity index remained in positive territory for an eighth consecutive quarter, reflecting continued improvement in supply conditions.
Property Prices Continue to Rise
Residential property prices increased by 5 percent year-on-year in the third quarter of 2025, compared with 4.7 percent in the previous quarter. Apartment prices accelerated by 6.4 percent, while house prices grew more slowly, at 2.6 percent.
On a regional level, house price growth decelerated in Limassol and Paphos to 5.5 percent and 7.4 percent respectively. Larnaca maintained a growth rate of 4.2 percent, while Famagusta recorded a 1.6 percent decline.
Property Sales Surpass 2024 Levels
Property sales continue to rise, according to the latest figures from the Land Registry. In the first eleven months of 2025, sales increased by 14 percent, reaching 16,455 transactions, up from 14,458 in the same period last year.
Further support to the market is expected from the government’s plan to construct around 500 residential units in Nicosia, Limassol, Larnaca and Paphos at a cost of 70 million euros.