Cyprus Mail

Priced out of the market, spiralling property prices

Unfulfilled dream purchasing a property
2022 in review: cheaper housing is in short supply

There’s a lot to whine about and I’m generally pretty good at it, so here goes: decent housing is largely unaffordable.

Students renting in the north, changing demographics, the passport scandal, rising interest rates and cultural shifts – the surging costs in the real estate and rental market has it all.

It’s a story which captures the changes in Cypriot society quite neatly and some of its challenges, with seemingly no solutions being seriously considered.

What’s telling is that the housing pressures faced by many haven’t even really featured in the presidential election campaigns. A cynic might say that the voting body is not demanding change as they don’t really need it: many are simply given houses or apartments by the family, while others are doing well off higher rental prices which yield higher returns on their investments.

Perhaps it’s mainly an issue impacting the younger – those less likely to vote – generation.

Most of the experts I’ve spoken to say that the higher prices are simply down to supply and demand, the core underlying principle of determining house prices.

First up, the demand side.

Despite the natural birth rate in Cyrus – projected to be 1.3 this year – being below that of replacement, 2.1, the population in the government-controlled areas risen almost ten per cent in ten years.

Also interesting is the number of residents with foreign citizenship who make-up of the population which has risen from 4.2 per cent in 1992 to 21 per cent in 2021 – with foreign nationals now numbering 193,300.

Notably, those preliminary results of the census were published in May and do not fully factor in the significant influx of refugees from Ukraine and those who relocated from Russia, Belarus and other nations in the region.

There is scant information available on this year’s arrivals of those seeking safety or simply those scouring sunnier shores, but coffeeshops from Paphos to Limassol are now frequented by tech-savvy professionals earning handsome salaries while remote working.

For them, some of whom have been priced out from Limassol, villas with swimming pools are affordable in Paphos, Larnaca and Famagusta.

Other than the increase in population tipping the scales on the demand side are those buying real estate for investment. Experts point to rising interest rates and further increases on the horizon as having pushed people to buy housing as a safer investment during inflation.

Demand for apartments over the past ten years has surged and so has their value, with analysts explaining that this is due to cultural and population changes.

Simply put, people are having fewer children and are doing so later in life – meaning that apartments are more viable and for longer.

Indeed, the latest census found that the average household size is down from 4.0 in 1976 to 2.6 in 2021 – meaning that apartments are now much more feasible than they were previously.

And what’s going on with the supply?

Those in the real estate and construction sector say that building more units would help meet demand and ease upply constraints.

They point to nations such as Puerto Rico with an area 8,870 km2 and population of 3.2 million, Lebanon at 10,452 km2 and population of 6.7 million. Or Israel, about double Cyprus’ size at 20,770 km2 but a population of 9.3 million – about ten times that of the Republic.

The image for Cyprus is a bit fuzzier due to the division and occupation, but it’s generally agreed that there is more room to build – if we want to.

But do we?

Many will bemoan NIMBYism (not-in-my-back-yard) as blocking much needed infrastructure and other developments – but they have a point.

Building a bunch of new homes would likely be immensely disruptive by impacting the environment – or even just altering what the country looks and feels like – while potentially hitting the pockets of those who are doing quite well from the high prices.

There hasn’t even really been much talk of what a solution would look like, there’s a sort of fuzzy, pixelated view that it would probably just mean a lot of construction.

Well, where would it take place anyway? There’s plenty of available land, sure. But how far out from cities would it be, how would it impact traffic, proximity to amenities, schools and so on?

And what type of housing units would it be, huge apartment blocks? Those would likely minimise the area given over to construction but comes at other costs.

They’d have to be central, too, as the newer generations putting off having families seem to prefer the city and all it offers.

So, what’s the lay of the land?

The cheapest available apartment in the capital listed on the bazaraki website is for €77,000 in Palouriotissa, getting you a grand total of 40m2 for a studio – costing €1,925/m2, as of the time of writing.

The next one is – again, a studio at 41m2 – in Lakatamia with a price tag of €84,000.

To be sure, there is more out there: such as a 72m2, two-bedroom apartment in Ayios Antonios, Nicosia, for €88,000 listed by Remu.

The supply issue is compounded by rising rates, inflation and higher construction costs which may have put off the smaller, average buyer from building a new home – meaning that they remain in the rental market and that extra unit never materialises.

Others argue that there has been plenty of construction already – just not catered to the average buyer.

The claim is that major market distortions were caused by the citizenship by investment (passport) programme. The reasoning goes that the construction industry shifted to high-end developments which could be sold to foreign investors for prices wildly above what local market conditions could meet – often artificially inflated by the perceived value of the passport, rather than the property itself.

A culture shock when studying in the UK was the seemingly harsh cut off faced by teens when turning 18 – “you’re an adult now, get out or pay rent”.

But it’s changing there, too, with more youngsters living with their family for longer. Perhaps that’s why the housing pressure fermenting in Cyprus hasn’t got that much play in the elections – it’s just more of a societal norm for children to stay on. Sure, it might be a bit longer now – but what’s a few more years?

House sharing amongst peers isn’t that common, yet, in Cyprus but it is picking up.

Anyway, I’ve been getting a whole load of videos recommended by young people buying cheap, abandoned village houses in Portugal – so I might give that a go.

Me deseje sorte.

Follow the Cyprus Mail on Google News

Related Posts

Prisoners ‘scared for their safety’ anti-torture report finds

Andria Kades

Our View: State-backed Cyta could threaten free market competition

CM: Our View

Christodoulides stresses EU role in resolving Cyprus problem

Jonathan Shkurko

North holds LGBT pride parade

Tom Cleaver

Turkish Cypriot leader condemns political exploitation of Mosque vandalism

Jonathan Shkurko

Row over Vasiliko terminal deepens

Jean Christou