07.05.2023
Real estate experts on Tuesday warned of a “giant problem” in the real estate market, as the impact of external factors, including inflation and high interest rates, is increasingly felt by both consumers and builders.
Marinos Kineiro, chairman of the council for registration of real estate agents, believes it is time for the government to intervene. He stressed that rising prices for building materials, high interest rates and inflationary pressures “individually and in combination put pressure on the purchasing power of citizens.”
As a result, people are rethinking their plans to buy a house or apartment.
Kineiro added that any new 5% VAT rules on first home purchases are also expected to impact demand.
From March 2022, the European Central Bank raised interest rates from -0.50% to 3.25%, he said. In Cyprus, the interest rate on home loans increased to 4.67% in March this year compared to 2.16% a year ago.
Consequently, people are increasingly turning to rentals, but the growing demand is also having a big impact on society. “Unfortunately, we are now witnessing unfavorable circumstances and people’s despair. We see the rent, which was 500 euros, go up to 700 or 800 euros after their contract expires, causing people to struggle to deal with it.”
Over time, it seems that “we will fall into uncharted waters”, and therefore the government should deal with this problem. “We need to rethink government housing policy, rentals, and even vacation rentals and short-term rentals like AirBnB.”
