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Wealth gap reshaping property sector

Wealth gap reshaping property sector


The Cyprus real estate sector is being reinvented due to growing wealth disparity, leading to a widening gap between potential home and apartment buyers. The trend will continue as the economy hits buffers.

Real estate agents report a large number of Cypriots with cash in the market to buy houses and apartments, which is helping to increase residential property sales.

The real estate market is experiencing a mini-boom as Cypriots rush to buy property before rising construction costs hit the market and become vulnerable to war in Ukraine.

The first five months of 2022 saw the highest number of sales filings since 2008, according to data released by the Land Registry Office.

There were 5,090 sales documents submitted from January to May compared to 3,577 in the same period last year, representing a 42% increase.

Compared to the same period in pre-coronavirus 2019, there was an increase of 5%.

Speaking to the Financial Mirror, Eleni Averkiou, real estate consultant for Danos/BNPRE Group, noted that while the sector may feel some relief, this could be a temporary state as the war in Ukraine continues to drive up construction costs.

“The growing demand for rentals should be of concern, indicating that many young couples and many families cannot afford to enter the property market at the moment,” Averkiu said.

A real estate consultant said the growing demand for rental property has pushed up rental prices.

“While we cannot quantify the increase in demand, our experience is that we are seeing unprecedented growth in demand for rental housing.”

She noted that there is a trend for families to look for smaller and cheaper accommodations, with the majority opting for one and two bedroom apartments.

“On the one hand, the cost of living makes households tighten their belts, and on the other hand, they cannot get a loan from a local bank to start their lives.”

Averkiou added several couples who chose to ride out the crisis by staying in rentals during the first years of their family journey.

The average rent for a one-bedroom apartment in Cyprus is 570 euros, for a two-bedroom apartment – 700 euros, for a three-bedroom apartment – 900 euros. Prices vary depending on the area.

She said the rent was equal to the monthly mortgage payments needed to buy the apartment; however, buyers are required to pay a 20% deposit.

“As the prices of new houses and apartments rise due to skyrocketing construction costs , couples are required to pay between €40,000 and €50,000 upfront.”

Reducing credits

The chairman of the Cyprus Property Owners Association, George Muskides, said he had not seen an increase in demand for rentals due to people not being able to buy houses.

“Of course, the cost of building materials has raised the price of new houses and apartments by at least 20%, but this increase will not alienate people in the market from money.”

Mouskides argued that people’s finances were in better shape as promotions in the financial and public sectors, which had been suspended, were restarted and the civil service lifted its hiring moratorium.

“This may help some couples overcome the high cost of construction and the cost of living at the moment. As time passes and the conflict in Ukraine is unresolved, spending on camping trips will definitely take its toll on the industry as more people turn to old houses and apartments rather than new projects.”

Muskides believes that if building prices continue to rise, combined with record inflation and higher interest rates, it could spark a “massive turn” towards rents.

Economist and former MP Anna Teologu argued that banks were turning away reliable couples seeking mortgages.

According to the Central Bank, the total volume of loans provided by Cypriot banks in April amounted to 193.6 million euros, compared with 378 million euros in the previous month, a decrease of 49%.

Annually, new loans recorded a decline of 9.1%. Consumer loans in April amounted to 11.4 million euros compared to 12.3 million euros in March, while housing loans fell to 64.8 million euros from 195.2 million euros.

The theologian cannot understand why banks are hesitant to issue home loans to young couples who are not in debt, and can prove that they can repay installments because they pay rent regularly.

“A mortgage of between €150,000 and €200,000 with a repayment period of 25 years means the couple has to pay a monthly installment of between €630 and €700. That’s what they pay for rent anyway.”

The economist argued that banks create a loss of future wealth.

“It is no secret that the growth of Cyprus in recent years has been supported by business loans taken out by people wishing to start their own business with their house as collateral. This will no longer be an option for young people who may want to venture into the business world. What’s more, people in the past have also taken out student loans to send their children to university. Now they won’t have that opportunity. Banks are depriving the future generation of Cyprus of potential wealth. Lending should not be seen as a giveaway of assets, but as an investment in future generations.”

Source and photo:, Editor

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