Experts on Tuesday warned that challenges in the real estate market amounted to a “giant problem” as the impact of external issues including inflation and high interest rates are becoming increasingly felt by consumers and constructors alike.

Chairman of the council for the registration of real estate agents Marinos Kineyirou opined it is high time the government intervenes.

He highlighted increased prices for construction materials, high interest rates and inflationary pressures are “individually and combined putting pressure on citizens’ purchasing power.”

As a result, members of the public are revising their plans to purchase a house or apartment.

Kineyirou added any new regulations of the five per cent VAT for the acquisition of a first home is also expected to affect demand.

Since March 2022, the European Central Bank has increased interest rates from -0.50 per cent to 3.25 per cent – with more expected to come, he said. In Cyprus, the interest rate for housing loans increased to 4.67 per cent in March this year, up from 2.16 a year ago.

Consequently, people are increasingly turning to rent but increasing demand is also hitting members of the public hard. “Unfortunately, we are now becoming witness of unfortunate circumstances and peoples’ desperation. We see rents which were at €500 go up to €700 or €800 once their contract expires, leaving people struggling to make it.”

As time goes on, it appears “we will be going to unchartered waters” and this is why the government should touch on the problem, Kineyirou said.

“We need to re-examine the state’s housing policy, tenancy and even the issues related to the provision of houses and apartments to vacationers as well as short-term rentals such as AirBnB.”