20.02.2023
Housing prices and rents are rising due to a lack of supply, with real estate analysts suggesting the authorities take drastic measures to bring new properties to the market, even by imposing a tax on unused land.
Pavlos Loizou, CEO of Ask WiRE, said research by his firm found that during this period of high demand, land is being withheld from the market or underutilized.
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.
“By focusing on the high demand Acropolis area of Nicosia, Ask WiRE has found space for another 10,180 apartments. The reason these properties were not built is because the land is being held or the project developers are not making the maximum use of the allowed development ratio.
He argues that this, combined with population growth, is one of the reasons for inflated housing and rent prices.
“The population has grown by 85,000 in ten years, according to the 2021 census, and between 30,000 and 50,000 more people have arrived since then, either as refugees from the war in Ukraine or attracted by government benefits for high-tech companies and their employees. So we are currently facing a supply problem, not a demand problem.
According to the Ask WiRE Property Index for the fourth quarter of 2022, average annual property prices in Cyprus rose by 9.9% for apartments, 1.0% for houses and 0.3% for offices.
Selling prices also increased by 4.7% for holiday apartments and 0.9% for holiday homes, but decreased by 1.4% for retail and 3.7% for warehouses.
Nicosia stood out from other areas in that apartment prices continued to rise last year (2.5% in the fourth quarter of 2022).
Quarterly sales volumes increased by 1.6% for apartments, 0.1% for houses and 0.4% for offices and remained stable for retail and warehouse premises.
As for the cost of rent, it was a different story compared to the fourth quarter of 2021.
The rent for apartments increased by 18.2%, for houses – by 11.6%, for trade – by 0.9%, for offices – by 6.3%, for holiday apartments – by 16.9% and for houses – by 12.8%, while the rent for warehouse space decreased by 0.4%.
The latest Ask WiRE survey identified 2,369 parcels totaling 1,689,921 sq. In these quarters, Ask WiRE surveyors recorded 9,240 residential units with a total area of 1,131,791 sq.m. Based on the existing urban development zones, a total of 2,149,741 sq.m. Thus, the unused development factor is 1,017,950 sq.m.
“Our results show that only 53% of the allowed development ratio was used in the Acropolis. If we calculated that the average apartment occupies 100 sq. m, it turns out that there is an opportunity to build another 10,180 apartments.
Ask WiRE conducted a similar survey in an area near Limassol city center and got similar 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. As we mentioned, this can come about by taxing idle properties in high demand areas.
Pavlos Loizou believes that this will force landowners to either develop their land or sell it to third parties who have the means to do so.
“Our proposal is not for the authorities to start taxing homeowners with an unused coefficient, but for developers to use the coefficient to the fullest. It is clear that for the foreseeable future, house prices and rents will continue to rise, and suburban rents will also begin to rise if nothing is done.
