Soaring property prices and stubborn rents push Cyprus housing affordability to the brink

Cyprus house prices rose 7.9 per cent year-on-year in the second quarter of 2026, significantly faster than the EU average, according to both Eurostat and Cyprus Statistical Service (Cystat) data, reflecting renewed momentum in the island’s housing market. The increase in Cyprus compared with the second quarter of 2025 was above the 4.7 per cent rise recorded across the EU and the 4.0 per cent increase in the euro area. Cyprus also recorded stronger quarterly growth, with house prices rising 2.4 per cent between the first and second quarters of 2026, compared with increases of 1.2 per cent in the EU and 1.1 per cent in the euro area. The latest Cystat figures showed that Cyprus’ House Price Index reached 105.46 points in the second quarter, up from 102.95 in the first quarter and 97.74 a year earlier. The annual increase represented a sharp acceleration from the 3.4 per cent recorded in Cyprus in the first quarter of 2026. Annual house price growth had stood at 2.9 per cent in the second quarter of 2025, before increasing to 4.2 per cent in the third quarter and 6.0 per cent in the fourth. The latest figures therefore put Cyprus’ housing market among those experiencing relatively strong annual price growth in the EU. Eurostat recorded the highest annual increases among EU countries with available data in Portugal, where prices rose 16.5 per cent, followed by Bulgaria at 15.5 per cent and Lithuania at 14.3 per cent. At the other end of the scale, house prices fell by 2.7 per cent in Finland, 2.2 per cent in Luxembourg and 0.8 per cent in France. Overall, 23 EU countries recorded annual house price increases, while three reported declines. Compared with the first quarter, prices increased in 24 EU countries and fell in two. Lithuania recorded the strongest quarterly increase at 5.0 per cent, followed by Bulgaria at 4.5 per cent and Romania at 4.4 per cent. Prices fell by 1.4 per cent in Hungary and 0.8 per cent in France. Cyprus growth accelerates The Cystat figures show that the acceleration in Cyprus was not confined to one quarter. After falling by 1.8 per cent in the second quarter of 2025, the island’s house price index increased by 3.7 per cent in the third quarter, remained unchanged in the fourth and rose by 1.6 per cent in the first quarter of 2026. The 2.4 per cent increase recorded in the second quarter brought the index to its highest level in the period covered by the latest figures. Both new and existing properties contributed to the increase. The sub-index for new dwellings rose to 105.73 points in the second quarter from 103.25 in the first. New dwelling prices had increased from an index level of 96.26 in the second quarter of 2025 to 101.71 in the third quarter, 102.06 in the fourth and 103.25 in the first quarter of 2026. The sub-index then climbed further to 105.73 in the second quarter, the figures showed. Existing dwellings also recorded a substantial increase, with their sub-index rising to 105.10 from 102.51 in the first quarter. The existing dwelling index had followed a more uneven path, falling from 100.84 in the second quarter of 2025 to 100.59 in the third and 99.82 in the fourth, before recovering to 102.51 in the first quarter of 2026. It then increased to 105.10 in the second quarter, the report added. Cystat’s House Price Index measures changes in average residential property prices for both new and existing dwellings and includes the land component of residential property. The figures are based on information from the Department of Lands and Surveys and cover areas under the control of the Republic of Cyprus. EU house price growth eases While house prices continued to rise across the EU, the latest figures indicate that the pace of annual growth has moderated slightly. EU house prices rose 5.5 per cent year-on-year in the third quarter of 2025, followed by a 5.4 per cent increase in the fourth quarter, 5.1 per cent in the first quarter of 2026 and 4.7 per cent in the second. The euro area followed a similar trajectory, with annual growth slowing from 5.2 per cent in the third quarter of 2025 to 5.1 per cent in the fourth, 4.6 per cent in the first quarter of 2026 and 4.0 per cent in the second. Quarterly growth in the EU also eased from 1.6 per cent in the third quarter of 2025 to 0.7 per cent in the fourth, before rising by 1.1 per cent in the first quarter of 2026 and 1.2 per cent in the second. In the euro area, quarterly growth stood at 1.5 per cent in the third quarter of 2025, 0.4 per cent in the fourth, 0.9 per cent in the first quarter of 2026 and 1.1 per cent in the second. The broader figures show that Cyprus experienced faster annual house price growth than the EU and euro area during the second quarter, while also recording a stronger quarterly increase. Rents continue rising The wider European housing market also continued to see higher rents, the statistical office reported. EU rents increased by 3.0 per cent year-on-year in the second quarter of 2026, while euro area rents rose at a similar pace. Compared with the first quarter, rents across the EU increased by 0.7 per cent, the figures showed. Looking back to 2025, EU house prices had increased by 4.1 per cent by the second quarter of 2026, while rents had risen by 2.6 per cent. Rents increased in every EU country over the period from the 2025 annual average to the second quarter of 2026. The sharpest increases were recorded in Romania at 41.2 per cent, Croatia at 22.1 per cent and Slovenia at 10.2 per cent. The smallest increases were recorded in Estonia and Finland, both at 0.1 per cent, followed by Luxembourg at 1.2 per cent. Eurostat data on actual rental payments also show that rental costs in Cyprus remained elevated during 2026, with the relevant index standing at 104.30 in both July and August, after reaching 103.37 in March. The combination of rising purchase prices and continued pressure on rents means the latest European figures point to continued increases in housing costs, although the pace of house price growth varies considerably between countries. For Cyprus, the second quarter figures show a particularly strong annual increase, with prices rising at almost twice the rate recorded across the EU as a whole.