Following yesterday’s report, “Cyprus housing shortage reaches 39,000 homes as prices rise“, economist Dr Stelios Platis and Polys Kourousides, president of the Cyprus Property Valuers Association, have set out different approaches to the housing crisis and rising property prices.
Both say people should find it easier to buy a home. But they disagree on how to achieve that: Platis wants limits on some overseas demand and cheaper finance for permanent residents, while Kourousides argues that Cyprus needs to build more homes.
Platis calls for a radical change
Platis says housing should be treated as a social issue, not just a property market concern. He describes a home as a source of security and stability for families.
He argues that the government should consider cheaper finance for people who live and work permanently in Cyprus and want to buy a main home.
Platis also proposes setting a cap on the share of homes in large residential developments that can be sold or rented to third-country nationals. He says this could help keep more new homes available to permanent residents.
As an example, he cited a development of 100 flats where 30% might be reserved for the domestic market. In his view, this could reduce overseas demand for that portion of the development and put downward pressure on the prices paid by eligible buyers.
He also called for special protections in areas where land is naturally scarce, including coastal zones and places of environmental or social importance. One option, he said, would be a cap on ownership by third-country nationals in these areas.
Kourousides warns that subsidies could push up prices
Kourousides agreed that young people and couples need access to affordable finance. But he warned that helping buyers spend more, without increasing the number of homes available, could raise demand and push prices higher.
“The solution to the housing crisis is not subsidising demand. It is increasing the supply of housing,” was his central argument.
Building new homes takes time, he said. If demand rises before the market can add more homes, prices could increase further.
The debate over foreign buyers
The sharpest disagreement concerned whether Cyprus should restrict property purchases by third-country nationals.
Kourousides warned that the property market is closely linked to wider economic activity. A sudden fall in demand, he said, could create problems for the sector. He pointed to earlier periods when property sales fell sharply, alongside the effects of the wider economic crisis in Cyprus.
Platis said his proposal would not stop construction. Instead, he argued, it would limit the share of homes in certain developments that could be sold to specific categories of overseas buyers, directing more of the new supply towards the domestic market.
He also argued that overseas demand is a significant factor behind rising prices. Without intervention, he said, Cypriot buyers would continue to compete with buyers who have greater spending power. Platis also criticised what he sees as the influence of large developers on policymaking.
Kourousides cautioned against measures that could cause a sudden drop in demand. If the supply of new properties rises significantly while overseas demand falls, he warned, the market could face a sharp price correction.
Call to raise the 5% VAT threshold
Kourousides also proposed a more immediate measure for people buying a main home: raising the price threshold linked to the reduced 5% VAT rate.
He said the threshold is currently €350,000 and was set in 2023. Given the cumulative rise in property prices since then, he argued it should increase to €400,000. That could help buyers who now pay more because of higher prices retain access to the reduced rate.
Kourousides said the change could be introduced quickly and offer financial relief to households buying a main home.
He also cited a roughly 68% rise in building permits in 2026 compared with the previous year. On that basis, he expects property supply to increase in the coming period. He warned that a sharp simultaneous fall in overseas demand could lead to a strong market correction. The 68% figure was cited by Kourousides during the discussion.
Two routes to more affordable homes
The debate set out two different economic approaches to Cyprus’ housing problem.
Platis favours cheaper finance for permanent residents; more homes directed to the domestic market and limits on third-country nationals demand in some developments and areas.
Kourousides sees an increase in the overall supply of homes as the main answer. He supports targeted steps such as raising the threshold for reduced VAT but warns that sudden restrictions could weaken demand and construction.
Both agree that the housing crisis has become a serious concern for young people and households. They also agree that action is needed to improve access to affordable homes.
(Adapted from an article published by StockWatch)
