The (Un)Housing market in Cyprus

Op-eds housingproperties The (Un)Housing market in Cyprus Panayiotis Iona Press Photo Relevant News The (Un)Housing market in Cyprus 7 July 2026 They are human beings 7 July 2026 “I am a collateral loss”: MP on her mother’s 1993 murder after femicide debate 7 July 2026 newsroom 7 July 2026 FacebookXWhatsAppEmailPrintViber *By Panayiotis Iona Housing affordability has become one of the biggest challenges facing Cypriot families today. Owning a home has traditionally been one of the defining aspirations of Cypriots. Unfortunately, for an increasing number of especially young people, that aspiration is slowly becoming elusive. Based on Eurostat figures, housing prices in Cyprus increased by approximately 52.9% between 2015 and 2025, while rental prices rose by around 26% over the same period. These figures represent national averages, and naturally prices vary depending on location and property type. Nevertheless, they paint a very clear picture of how the situation is progressing. The consequences are straightforward. In 2015, the average home cost around eight times the average annual salary. By 2025, that figure had increased to approximately ten times annual earnings. It is therefore indisputable that purchasing a home has become significantly more difficult for the average Cypriot family. So, how did we get here? The answer lies in a combination of policy decisions, market forces and changing geopolitical realities. Following the banking crisis of March 2013—the first bail-in in the history of the Eurozone—Cyprus sought to attract foreign investment. The Citizenship by Investment Programme (CIP), although introduced in 2007, became particularly attractive after the investment thresholds were substantially reduced in 2013 and again in 2014. One of the programme’s requirements was the acquisition of a newly built residential property worth at least €500,000 plus VAT. Until the programme’s termination in 2020, billions of euros flowed into the Cypriot property market. Foreign investment itself was never the problem. On the contrary, it played an important role in supporting economic recovery after one of the darkest periods in our country’s recent history. The issue was where that investment was directed. Developers understandably followed the highest returns and concentrated heavily on luxury villas, premium residential developments and high-rise apartment buildings. Those projects catered to a very specific and affluent international market while simultaneously driving land values upwards across the island. The result was a property market increasingly focused on high-end developments, with limited incentive to construct affordable homes for local buyers. This trend accelerated further following the outbreak of the war in Ukraine in 2022 (and the Israel conflict of 2023). Businesses and professionals relocated to Cyprus from countries including Ukraine, Russia, Lithuania, Latvia and Israel, bringing with them additional investment and increased demand for residential and commercial property. Once again, this was not inherently negative. Cyprus has benefited economically from becoming an attractive destination for international businesses. However, the housing market continued to evolve in a direction that increasingly served investors rather than residents. Construction resources—land, labour and capital—naturally gravitated towards projects offering the highest financial returns. In a free market, that is precisely what one would expect. Unfortunately, the consequence has been a widening disconnect between what the market is building and what the average Cypriot family actually needs. Today, both purchase prices and rental costs for modest family homes have reached levels that many young households simply cannot afford. Supply of affordable housing has failed to keep pace with demand, while a significant proportion of new developments continue to target affluent domestic and foreign buyers. The imbalance becomes even more evident when considering purchasing power. Take two professionals earning exactly the same gross annual salary—one Cypriot and one relocating to Cyprus under the current tax incentives available to foreign professionals. Despite earning identical salaries, the latter will often enjoy significantly higher disposable income due to the available tax exemptions. The result is simple economics. Two buyers enter the same housing market with very different purchasing power. Add generous relocation packages provided by many non-Cypriot employers to non-Cypriot employees, and the average indigenous Cypriot finds themselves competing at a structural disadvantage, both when purchasing a property and when renting one. How do we solve this? Increasing the supply of affordable housing is the obvious answer. The difficulty is that this would require developers to divert resources away from highly profitable luxury projects towards developments with considerably lower profit margins. In a free-market economy, expecting private businesses to voluntarily sacrifice profitability for the greater social good is unrealistic. This is precisely where government policy should step in—not by replacing the market, but by correcting its imbalances. I have never been an advocate of large-scale state-owned social housing. Long-term dependence on welfare systems is rarely sustainable and often creates unintended economic and social consequences. Markets should remain free wherever possible. However, there is one institution uniquely positioned to make a meaningful contribution. The second-largest landowner in Cyprus, after the State itself, is the Church of Cyprus through its dioceses, parishes and affiliated organisations. Unlike a private property developer, the Church is not solely driven by shareholder returns. It already maintains substantial investments across numerous sectors, including hospitality, banking, brewing, agriculture and commercial real estate, generating income to support its wider mission. Affordable housing presents another opportunity for the Church to fulfil that social mission while simultaneously creating a sustainable long-term revenue stream. Large-scale residential developments could be constructed on Church-owned land and offered at affordable rental rates through institutions such as KEDIPES or similar government-backed housing schemes. The State could facilitate such projects through expedited planning approvals, infrastructure support, carefully targeted planning incentives and potentially preferential financing. Such an approach would increase housing supply without significantly distorting the private market, utilise existing land resources that are currently outside normal commercial pressures and create a partnership capable of delivering genuine social benefit. No single proposal will solve Cyprus’ housing challenges overnight. However, what is becoming increasingly clear is that continuing with the current approach is not a solution at all. Cyprus does not suffer from a shortage of land, construction expertise or investment capital. What it lacks is a housing strategy that aligns private investment with the needs of society. If today’s young families cannot afford to purchase—or even rent—a modest home despite working full-time, then the housing market is no longer serving the very people it is supposed to serve. The housing crisis is no longer merely an economic issue. It has become a demographic issue, a social issue and, ultimately, a national issue. Every year meaningful action is delayed, another generation postpones buying a home, starting a family and building its future in Cyprus. Perhaps that should concern us far more than another luxury tower adorning our skyline. Just my two pennies’ worth. *Panayiotis Iona is director of Chelco VAT Ltd Subscribe to our Newsletter Latest News They are human beings “I am a collateral loss”: MP on her mother’s 1993 murder after femicide debate Overnight pharmacies on Tuesday, July 7 New EU rules: 3-hour compensation, free cabin baggage When platforms become regulators of democracy French far-right leader Le Pen handed three-year sentence, two years suspended Cocaine smuggler’s risky delivery method backfires at Larnaca airport Follow en.philenews on Google News and be the first to know all the news about Cyprus and the world.