Cyprus is facing a housing crisis, as young couples are locked out of the property market by skyrocketing prices, while supply is quickly diminishing due to thousands moving to the island.
President Nikos Christodoulides recently called it “an unprecedented housing crisis, affecting mainly younger generations”.
“The particularly high cost of building a house and the difficulty in securing financing have shut out many of our compatriots from the housing market. I would like to point out that the cost of securing affordable housing, either by purchase or rental, has risen sharply,” Christodoulides said recently.
Despite promising he will introduce a holistic affordable strategy in the coming months, the government have come under criticism “for not doing much”.
In comments to the Financial Mirror, Green Party leader and MP Charalambos Theopemptou said that calculating the birth and death rate, combined with newcomers, existing supply cannot cover needs.
Parliament has pressured the government to inform it of the number of homes available for young couples in the next ten years, only to receive a vague response.
“Based on state data on deaths and births, and information on the number of migrants, refugees from Ukraine and employees of high-tech companies moving to Cyprus, we estimate that an additional 2,000 to 3,000 new homes will have to be built each year for the next decade,” said Theopemptou.
The MP calculates that Cyprus’ population will increase by 6,000 every year.
“Cyprus does not have a comprehensive housing strategy nor planning. The finest example is the government’s decision to set up the Cyprus Technological University in the heart of Limassol, where it is almost impossible for students to rent, as rents as sky high, and there is no supply,” said Theopemptou.
He explained that most available housing units were taken up by employees of offshore and high-tech companies relocating to Cyprus. The MP said that supply is shortened further by demand from Ukrainian refugees, who fled their country after Russia’s invasion last year. A government scheme sponsoring hotels to accommodate Ukrainian refugees ends on Wednesday. According to government figures, some 3,000 Ukrainian refugees will seek a place to rent. The majority of Ukrainian refugees are living in Limassol and Larnaca.
The Green MP argued that the state needs to put forward an affordable housing strategy. “It’s been done everywhere in the EU. It’s called social and public housing. The state can build houses or apartments to rent or sell to low-income families. Around two-thirds of homes in Vienna, Austria, were built with the social housing model,” said Theopemptou.
Real estate agents confirm the lack of housing units has led to an unprecedented increase in rents and property prices.
In comments to the Financial Mirror, Pavlos Loizou, CEO of Ask WiRE, said: “We’ve seen prices hike in the past ten years, with supply moving in the opposite direction.”
Loizou argued that, excluding high-end properties, just a few housing projects had been built in the past 15 years.
“The sector was affected by the international real estate at the beginning of the previous decade, with almost nothing being built until 2016, when the industry started taking off again,” said Loizou.
He noted that developers in the following years concentrated on projects targeting foreign investors seeking a Cyprus passport.
“This lasted until 2020 when the scheme ended following a number of scandals. Unfortunately, the industry was put on ice due to the coronavirus pandemic.” He said that in the past year or so, the industry has been striving to get its bearings, building housing units for locals on lower budgets.
“However, movement in the industry is not enough to cover heightened demand from newcomers to Cypriot society, such as Ukrainians, Israelis, and Lebanese. This undersupply has pushed up prices, and the only way to bring down prices is to increase supply. This would mean not only an increase in housing projects but affordable housing units.”
He argued that government intervention would not solve the problem, as it would only cater to hundreds of citizens whilst there is a demand for thousands of units.
“Drastic measures are needed to bring new properties onto the market, even by taxing unused land.”
Loizou said that a survey conducted by his firm has shown that during this period of heightened demand, land is being held from the market or not exploited to the maximum.
Ask WiRE has found this was the case in Limassol, which analysts said is close to saturation, and Nicosia, where demand for housing is at an all-time high.
“These properties have not been built because the land is being withheld, or project developers are not making the most of the building coefficient allowed.”
Ask WiRE’s latest survey identified 2,369 plots with a total area of 1,689,921m2 in Nicosia. Surveyors recorded 9,240 residential units within these blocks with a total area of 1,131,791m2. Based on the existing urban planning zones, a total of 2,149,741m2 can be built on. Therefore, the unutilized building factor is 1,017,950m2.
“Our findings show that in Acropolis (Nicosia), which is in high demand, just 53% of the allowed building coefficient has been used. There is room for another 10,180 apartments”.
Ask WiRE did a similar survey close to Limassol city centre, finding comparable results. According to surveyors, there is room for another 8,000 apartments in the uptown area.
“It is clear that authorities must address the high rents and the cost of buying a home. The solution is simple and stares us in the face. As we have mentioned, this can come through the taxation of idle properties in areas with high demand,” said Loizou.
He believes this would force landowners to either develop their land or sell it to third parties with the means to do so.
President Christodoulides has committed to delivering his campaign promises to introduce an affordable housing strategy.
He said the government has decided to design a new housing policy framework, establishing a Unified Housing Agency soon, which will be responsible for formulating the state’s housing policy to meet the needs of citizens.
“The government has decided to design a new housing policy framework.”