With rising construction costs, loan payments, and rents, many Cypriots are finding it increasingly difficult to secure affordable housing. This week, the government and opposition party Akel clashed over the issue, drawing on a recent Eurostat survey. Each side presented contrasting views, but the truth lies somewhere in the middle.
The Eurostat Data and Political Disputes
The Eurostat survey ignited the debate by revealing that 11.2% of Cypriots have experienced housing difficulties, compared to 4.9% across the EU. For those at risk of poverty, 14.7% in Cyprus reported housing problems, compared to 8.5% in the EU.
Akel seized on these figures to criticize the government for failing to address the housing crisis. They pointed to rising interest rates, higher costs of living, and increasing rents, claiming that these pressures have worsened the situation for vulnerable groups and much of the middle class. Akel described the government’s actions as “all talk, no action.”
Finance Minister Makis Keravnos, however, downplayed the crisis, attributing 90% of the housing difficulties to the lasting effects of the Turkish invasion of 1974. He argued that Cyprus compares well with the EU: only 1.3% of Cypriots face housing problems due to financial issues, far lower than the 25.9% EU average, and unemployment-related housing difficulties are negligible.
While the minister didn’t outright dismiss the housing problem, his remarks suggested Cyprus is in a far better situation than the opposition claims. However, the realities of rising costs, insufficient housing supply, and growing demand paint a more complicated picture.
The Government’s Housing Plans
Housing supply and prices are at the core of Cyprus’ housing challenges. According to Patrina Taramidou, Head of the Housing Policy Directorate, Cyprus is struggling to meet the growing demand for affordable housing, particularly in urban areas, which has driven up both rental and purchase prices.
In response, the government has introduced several initiatives, including the ‘Build to Rent’ scheme, aimed at increasing housing availability by offering developers incentives to build units at lower prices. The scheme, expected to deliver 800 housing units in the next three years, has generated interest from developers, though results are not anticipated for some time.
Additionally, the ‘Renovate and Rent’ programme, set to launch in November, will offer grants to owners of older properties to renovate them, with the obligation to rent them out at affordable prices for at least four years. This measure aims to boost housing availability in the short term.
Real Estate Expert’s View: Supply, Demand, and Rising Costs
Real estate expert Pavlos Loizou believes that the housing problem in Cyprus is real, though not catastrophic. He attributes much of the strain to a sharp increase in the working population—about 40,000 people between 2022 and 2024—including many foreign workers from Israel, Ukraine, and Russia. This sudden surge in demand has driven rents up, while construction has lagged.
Although there’s significant construction underway in cities like Nicosia and Limassol, many of these units are luxury properties aimed at wealthier buyers, leaving a gap in affordable housing options.
Loizou also highlights the impact of non-performing loans (NPLs) on the housing market. With an estimated €20 billion in NPLs tied to real estate, many properties remain stuck in the system, preventing their availability on the market. Additionally, rising interest rates have compounded the pressure on both buyers and renters.
Conclusion: A Real Problem, But Not a Crisis
The housing situation in Cyprus is undeniably challenging. Rising costs, limited affordable housing, and increasing demand have created difficulties for a significant portion of the population, especially lower-income groups. While the government’s plans aim to address the issue, results are still forthcoming.
However, the situation may not yet constitute a full-blown crisis. As Loizou suggests, the problem is serious but not tragic. There is a clear need for more affordable housing, and government action must be sustained to ensure tangible improvements in the coming years.
source: Cyprus Mail
