28.05.2023
Cyprus is facing a housing crisis as young couples are unable to enter the real estate market due to skyrocketing prices and supply is rapidly shrinking as thousands of people move to the island.
President Nikos Christodoulidis recently called it “an unprecedented housing crisis affecting mainly the younger generation.”
“The exorbitant cost of building a house and the difficulty of securing financing have deprived many of our countrymen of access to the housing market. I would like to point out that the cost of acquiring affordable housing by buying or renting has risen dramatically,” Christodoulidis said recently .
Despite the promise that it will present a coherent accessible strategy in the coming months, the government has been criticized “for not doing enough.”
Leader of the Green Party and MP Charalambos Theopemptu said that when calculating the birth and death rate combined with new arrivals , the existing supply cannot cover the needs. Parliament pressured the government to tell it the number of homes available to young couples in the next ten years, but received a vague response.
“Based on government data on mortality and birth rates, as well as information on the number of migrants, refugees from Ukraine and employees of high-tech companies moving to Cyprus, we estimate that the population of Cyprus will increase by 6,000 people annually in the next decade,” Theopemptou said . . “There is no comprehensive housing strategy or planning in Cyprus. The best example is the government’s decision to establish the Cyprus Technological University in the center of Limassol , where it is almost impossible for students to rent housing because the rent is sky-high and there is no supply,” Theopemptou said . He explained that most of the available housing was occupied by employees of offshore and high-tech companies who moved to Cyprus.
The MP said that the supply was further reduced due to demand from Ukrainian refugees who fled their country last year. The state scheme for sponsoring hotels to accommodate Ukrainian refugees ends on Wednesday. About 3,000 Ukrainian refugees will be looking for housing to rent, according to the government. The majority of Ukrainian refugees live in Limassol and Larnaca .
The MP argued that the state needs to put forward a strategy for affordable housing. “This has been done throughout the EU. This is called social and public housing. The state may build houses or apartments to rent or sell to low-income families. About two-thirds of the houses in Vienna, Austria, were built according to the social housing model,” Theopemptu said .
High rent
Real estate agents confirm that the housing shortage has led to unprecedented increases in rents and property prices.
Pavlos Loizu , CEO of Ask WiRE , said: “Over the past ten years, we have seen prices rise, while the supply has constantly decreased.”
Loisou argued that in the past 15 years, with the exception of luxury real estate, only a few housing projects have been built. “The sector was affected by international real estate at the beginning of the previous decade, and almost nothing was built until 2016, when the industry started to grow again,” Loizou said .
He noted that in subsequent years, developers have focused on projects aimed at foreign investors seeking to obtain a Cypriot passport. “This continued until 2020 when the scheme closed after a series of scandals. Unfortunately, the industry has been frozen due to the coronavirus pandemic .”
He said that in the past year or so, the industry has been looking to gain momentum by building housing for local residents on a smaller budget. “However, the movement in the industry is not enough to cover the increased demand from newcomers to Cypriot society such as Ukrainians, Israelis and Lebanese. This shortage has driven prices up, and the only way to bring prices down is to increase supply. This will mean not only an increase in housing projects, but also affordable housing.”
He argued that government intervention would not solve the problem as it would only serve hundreds of citizens while there was a demand for thousands of units. “Strong action is needed to bring new real estate to market, even at the cost of taxing unused land.”
Loizou said research by his firm has shown that during this period of high demand, land is being pulled off the market or not being used to its full potential. Ask WiRE found that this was the case in Limassol , which analysts say is close to saturation, and Nicosia, where housing demand is at an all-time high. “These properties have not been built because the land is being held or the project developers are not making the most of the allowed development ratio.”
Taxation
Ask’s latest research WiRE identified 2,369 parcels with a total area of 1,689,921 sq. m in Nicosia. Surveyors recorded 9,240 residential units in these quarters with a total area of 1,131,791 sq.m. Based on the existing urban development zones , the total area can be built up 2,149,741 sq.m. Thus, the unused development factor is 1,017,950 sq.m.
“Our results show that the highly sought-after Acropolis (Nicosia) has used just 53% of its allowed development ratio. There is room for another 10,180 apartments.”
Ask WiRE conducted a similar survey near the center of Limassol and got comparable results. According to surveyors, there is room for another 8,000 apartments in the upper part of the city.
“It is clear that the authorities must solve the problem of high rents and the cost of buying a house. The solution is simple and obvious. As we have already mentioned, this could come at the cost of taxing idle properties in areas with high demand,” Loizou said . He believes this will force landowners to either develop their land or sell it to third parties with the means to do so.
President Christodoulides pledged to deliver on his campaign promises to implement an affordable housing strategy. He said the government has decided to develop a new housing policy framework, soon creating the Unified Housing Agency, which will be responsible for developing a state housing policy to meet the needs of citizens. “The government has decided to develop a new framework for housing policy.”
