TO RENT OR TO BUY IN CYPRUS?
HOMEOWNERSHIP IN CYPRUS IN DECLINE
A DOWNWARD TREND IN HOMEOWNERSHIP
Homeownership in Cyprus is a cornerstone of Cypriot life. At the turn of the century, approximately 80% of Cypriots owned their own homes. Recent figures indicate, however, that this now stands at 70% overall. This decline has prompted some analysts to attribute the downturn directly to the recent economic turmoil on the island. Others, however, have stated that there are other factors to consider also!
A SERIES OF ECONOMIC CHALLENGES
Several Cypriots are still reeling from the economic challenges faced after the 2013 financial meltdown. The financial crisis that followed saw more than onebank disappear along with a great deal of money. This has meant that the remaining banks have raised their lending criteria, which has made borrowing for a new home very difficult. Homeownership in Cyprus has suffered because of this. This long drawn out process along with significant shifts in the housing market sector over the past two decades has created a rather volatile housing market on the island. The stark increase in foreign cash buyers dominating the market has increased the investment arm of the property market, but not homeownership.
A CULTURAL CORNERSTONE OF CYPRIOT LIFE
Historically, Cyprus has boasted one of the highest homeownership rates globally. This has remainined a cultural cornerstone of Cypriot life that is deeply rooted in family traditions and societal values. This however, seems to be changing and recent studies have shown a changing trend indicating that home homeownership on the island is now dropping below the European Union average. Whilst there are still a few people who can still afford to buy their own homes, the majority it seems cannot and some analysts have suggested that if this trend continues, then there will be a need for new policies addressing housing affordability to support sustainable homeownership that will ensure that this tradition continues for future generations.
CONSTANT RENTAL INCREASES
The once nation of proud homeowners are now choosing to rent homes instead of building or purchasing new ones. Recent evidence has indicated that high demand in the rental sector is causing sharp rent rises all over the island. The more affluent homebuyers now favour cheaper options, such as apartments or homes in rural areas, as oppossed to expensive inner city properties. This has meant that potential property sellers have opted to rent their porperties instead.Â
AFFORDABILITY CHALLENGES FOR POTENTIAL NEW HOMEOWNERS
The numerous challenges faced by purchasers, or people that want to build a new home are evident on the island and affordability challenges amidst economic and market changes have proved too volatile. Falling household incomes and difficult access to financing have made homeownership less attainable for many. Additionally, rising property prices and high mortgage rates have further strained affordability for all Cypriots. The island’s real estate market has also seen increased foreign investment, particularly in urban centres and coastal areas, and this has further driven up property values all over the island making it more challenging for residents to purchase homes.
PROPERTY SALES IN CYPRUS SEE MODERATE GROWTH IN 2024
Last year’s Cyprus property market saw moderate growth, despite regional differences in filings for sales. According to land registry data, Nicosia and Larnaca led the way, helping to drive a 1.5% overall increase in sales.
The District of Nicosia experienced a significant surge of up to 14%, with the District of Larnaca following with a 5% rise. The three other districts however, saw a drop in sales, with the District of Paphos recording an 8% decline, followed by a 5% decline for the District of Famagusta and a 1% decline for the District of Limassol.
A NEW EUROPEAN HOUSING AFFORDABILITY STARTEGY
Cyprus is to benefit from a €10 billion European Union housing initiative. The European Investment Bank has launched a new platform that intends to invest in affordable and sustainable housing across Europe. This initiative is part of the European Union’s effort to address housing shortages across Europe. This is welcome news for Cyprus as it is suffering from a growing housing affordability crisis. The island has seen sharp increases in the cost of housing with rents rising significantly in recent years. The government is considering different ways to use the funding, including offering interest subsidies for new affordable housing. They also intend to directly finance projects that allocate units for affordable housing.
