NOWHERE in his presentation on the government’s housing scheme on Wednesday did Interior Minister Constantinos Petrides mention the citizenship-through-investment as a factor in the present shortage of affordable housing.
Instead, he blamed the spiralling rents and property prices on increased student populations, lucrative Airbnb rentals and the tight financial criteria since the 2013 crisis, making home loans difficult to obtain.
He also blamed past practices. Significant town planning mistakes had been made but the most crucial was past over-indebtedness, which did not take into account debt repayment capacity.
All of the above have certainly played a role in the present lower-income housing crisis to a lesser or greater extent. But why did he fail to mention the knock-on effect of the luxury high-rise apartments and villas, specifically built to fulfil the real estate purchase component necessary for super-wealthy foreigners to gain citizenship, on rents and property prices in general?
Clearly, the developers have inflated prices pushing up land prices across the board and owners of existing properties have been quick to jump on the bandwagon, charging ever more to sell or rent their properties, as mediocre as they may well be. It is these practices that have priced those on lower incomes out of the market as much as the difficulty of getting loans from a bank.
Nor should we underestimate stubbornness when it comes to the lack of affordable housing. How many times have we heard tell of the property owners who, believing that they can get more for a property because the market suggests they can, will leave their properties empty rather than rent or sell for less? A dose of realism on their part would certainly go some way to solving the shortage.
With over 10,000 places to stay hosted on the Airbnb website in Limassol, the place which has seen the highest rent and property price increases, the impact on affordable housing is clear. The attraction of this so far unregulated market is obvious, especially in Cyprus where it can still be incredibly hard to get rid of long-term tenants. Tougher regulations here could have also prevented the drop in affordable housing.
Rather alarmingly, the minister said that another reason for the housing shortage was the lack of construction of new buildings. He must surely have been referring specifically to affordable housing construction, because overall the building component of the construction sector rose by 129 per cent between the first halves of 2015 and 2019, and accounted for over 20 per cent of the growth of real GDP. This flurry of activity has almost entirely been in high-end properties. Elsewhere in the EU, the price of allowing this type of building has been to make developers also commit to building a certain percentage of affordable housing.
A government programme to tackle the housing crisis is long overdue, but with better planning, less greed and more honesty may well have been unnecessary.