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Cyprus housing prices surge despite record investment

Nigel Howarth
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Cyprus housing prices surge despite record investment

The housing market in Cyprus is facing mounting strain, with property prices rising sharply even as investment in residential development reaches record levels, according to a new study by Eurostat.

The report, Housing in Europe – 2025 edition, paints a picture of a market under pressure: rising costs, declining home ownership, and growing financial strain on households. Despite a construction boom and more than 10,000 building permits issued annually, affordability remains a persistent concern.

House prices climb as affordability worsens

Property prices in Cyprus have risen steeply over recent years. Between 2010 and 2024, prices followed a consistent upward trend, with a particularly sharp increase of 27.95% recorded in 2024 and a further 33.65% rise projected for 2025.

Across the European Union, house prices increased by 53% over the same period, driven largely by strong growth between 2013 and 2022. While there was a slight dip of 0.3% in 2023, prices resumed their upward trajectory in 2024 with a 3% increase.

Inflation has also played a role. Between 2010 and 2024, EU inflation reached 39%, although Cyprus remained relatively moderate at 23%.

Despite this, Cypriot households spent an average of 11.4% of their disposable income on housing in 2024, below the EU average of 19%. However, for lower-income households at risk of poverty, the burden rises significantly, highlighting widening inequality in housing affordability.

Falling home ownership signals structural shift

Home ownership in Cyprus has been gradually declining over the past decade. In 2015, 73% of residents owned their homes; by 2025, this had fallen to 69.2%.

While ownership remains the dominant tenure across Europe, the shift in Cyprus reflects changing affordability and access to housing. Across the EU, 68% of people live in owner-occupied homes, with renting more common in countries such as Germany and Austria.

At the same time, household sizes in Cyprus remain relatively large, averaging 2.5 people per household in 2024, above the EU average of 2.3, adding further pressure to housing demand.

Record housing investment fails to ease pressure

Cyprus stands out for its high level of housing investment. In 2024, 8% of GDP was directed towards residential development, the highest share in the EU, rising to 8.2% in 2025.

This is significantly above the EU average of just over 5%, and well ahead of countries such as Germany.

Yet, this surge in investment has not translated into lower costs for buyers or renters. The data suggests a structural imbalance, where increased supply has not been sufficient to offset demand pressures or affordability challenges.

Building activity remains strong, with 11,300 residential permits issued in 2024. However, across Europe, permit numbers have begun to decline after peaking in 2021, signalling potential future constraints in supply.

Housing costs remain near EU average

Overall housing costs in Cyprus, including utilities such as water, electricity and fuel, remain slightly below the EU average, at around 7.9% lower in 2024.

However, over the longer term, Cyprus has stayed broadly in line with European cost levels, suggesting limited relief for households despite lower relative pricing.

DGLOs urge government funding amid unsafe housing crisis

Nigel Howarth
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DGLOs urge government funding amid unsafe housing crisis

Local authorities in Cyprus are calling for urgent government funding after a wave of building inspections in Larnaca revealed multiple residential blocks at risk, forcing dozens of residents to leave their homes at short notice.

Evacuations highlight housing pressures

The Larnaca District Government Organisation (DLGO) has backed wider calls from municipal leaders for financial support from central government, warning that recent evacuations have exposed a growing housing and social challenge.

The appeal follows inspections of around 100 buildings, with 22 identified as potentially dangerous. Residents in affected apartment blocks have been given just three days to vacate, creating immediate pressure on housing availability.

While some tenants have been temporarily relocated, authorities acknowledged that many are still searching for alternative accommodation – an issue compounded by the peak tourist season, when rental supply is already stretched.

Local authorities say government funding is critical

Officials stressed that neither municipalities nor district organisations have the financial capacity to provide temporary or long-term housing solutions. Responsibility, they argue, lies with central government to enforce legislation and funding emergency responses.

The Interior Ministry confirmed that temporary housing arrangements will only last a few weeks, leaving displaced residents to secure their own longer-term solutions while repairs are carried out.

Similar concerns in Limassol

The issue is not confined to Larnaca. In Limassol, authorities have applied for both evacuation and demolition orders for a residential building in Germasogeia, signalling a broader structural safety concern across the island.

A court decision on the property is expected shortly, with potential implications for residents who may also face displacement.

Cyprus fast-track permits pause amid review calls

Nigel Howarth
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Cyprus fast-track permits pause amid review calls

Cyprus’ planning authorities are under growing pressure to pause the revocation of fast-track building permits, following a high-level meeting led by the Cyprus Scientific and Technical Chamber (ETEK).

The chamber has urged officials to halt cancellations until a full review of the system is completed, in a move aimed at stabilising the property and construction sector.

Calls for consistency in planning decisions

The meeting brought together key stakeholders, including ETEK president Constanti Constantinos, Cyprus Architects Association president Alkis Dikaios, and senior figures from the Cyprus Town Planning Department.

Discussions focused on inconsistencies in how fast-track permits have been assessed and, in some cases, revoked. While the system was designed to accelerate development approvals, gaps in implementation, particularly around mandatory application checks, have led to confusion for architects, developers and homeowners.

ETEK said some local authorities had failed to carry out required inspections on submitted plans. These checks are intended to identify major deviations, including those affecting residential comfort or the usability of parking spaces.

As a result, planning officials have now ordered a comprehensive review of all automatically issued certificates, with findings to be submitted to the Interior Ministry.

Construction projects in limbo

Until a unified interpretation of what qualifies as a “substantial deviation” is agreed, ETEK has called for all revocations to be suspended.

Where issues are identified in already approved permits, authorities are being asked to avoid immediate cancellation. Instead, designers should be notified and construction temporarily halted until each case is resolved.

The meeting also addressed financial concerns. Applicants whose permits were revoked will not be required to pay resubmission fees, and any payments already made should be refunded.

Technical committee to oversee disputed cases

A new technical committee will be established to review problematic applications before any future revocations are issued. The aim is to create a more consistent and transparent approach across districts.

Further guidance is expected shortly from the planning department, including clarification on documentation standards, accessibility rules, fire safety compliance and urban planning limits.

ETEK has also pledged to brief its members and run training seminars, while proposing reforms such as allowing incomplete applications to be corrected rather than rejected outright.

The chamber stressed that cooperation between public bodies and strict adherence to agreed procedures will be essential to restoring confidence in Cyprus’ fast-track planning system.

Cyprus faces housing crisis as dangerous building numbers mount

Nigel Howarth
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Cyprus faces housing crisis as dangerous building numbers mount

Cyprus is edging towards a new housing emergency as ageing and structurally unsound apartment blocks force a growing number of evacuations, leaving local authorities struggling to cope.

Municipalities and District Local Government Organizations (DLGOs) have issued stark warnings that dozens of families could be left homeless at short notice, with neither the funding nor the infrastructure in place to manage the fallout.

Recent evacuations in Larnaca and Limassol are widely seen as only the beginning, as inspections expand and safety concerns emerge in hundreds of older buildings across the island.

Growing pressure from dangerous residential blocks

Local authorities warn that efforts to prevent structural collapses risk spiralling into a broader humanitarian and housing crisis.

The Union of Cyprus Municipalities has stressed that forced evacuations are already displacing families without immediate alternatives, and the number of affected residents is expected to rise in the coming months.

Officials argue that preventing tragedy must not come at the cost of widespread homelessness, calling for coordinated government intervention. Proposals include the creation of a social safety net, clear operational guidelines, and rapid access to temporary accommodation.

However, councils and district bodies say they lack the financial resources, tools and capacity to provide either short-term or permanent housing at scale.

Calls for state funding and structural reform

DLGOs have echoed these concerns, insisting that responsibility for managing dangerous buildings must be matched by adequate funding and legal powers.

While temporary financial support has been provided, authorities say there is still no stable funding stream to sustain ongoing inspections, enforcement, and emergency housing measures.

They also highlight bureaucratic delays in the current system, which they argue fails to cover the full cost of interventions. In addition, officials maintain that building safety enforcement should be treated as a distinct function, separate from planning and licensing services.

New evacuation orders raise alarm

In Limassol, authorities have applied to the court for an evacuation and demolition order for a high-risk apartment block in the Germasogeia tourist area, described as one of the most dangerous buildings in the city. A ruling is pending, but dozens of tenants could soon require rehousing.

Meanwhile, in Larnaca, new evacuation notices have been issued for residential buildings deemed structurally dangerous, with occupants given just days to vacate due to the risk of collapse.

Local officials report that inspections have intensified in recent weeks, with dozens of buildings assessed. Several have already been classified at the highest risk level, requiring immediate evacuation.

The issue is not confined to a single city. Authorities warn that similar cases are likely to emerge across multiple municipalities and communities, potentially displacing large numbers of residents.

Temporary solutions fall short

Short-term accommodation schemes are being deployed, including emergency hosting programmes offering limited stays for displaced residents. However, these measures are widely viewed as insufficient given the scale of the problem.

The Interior Ministry has indicated that Civil Defence may assist with temporary housing where no alternatives exist, though such arrangements are expected to last only a few weeks.

At the same time, high rents and an already strained housing market are compounding the crisis, making it increasingly difficult for affected households to secure new accommodation quickly.

Urgent need for data and prevention

Engineering experts are calling for updated data on ageing buildings and stronger preventive inspection regimes.

Plans are under way to introduce a digital registry of dangerous buildings, allowing authorities to track building conditions and risk levels more effectively.

Early findings suggest the scale of the challenge is significant. In Larnaca alone, around 100 visual inspections have already been carried out, with dozens more buildings flagged as potentially dangerous and under further review.

Experts warn that Cyprus has a large stock of ageing buildings requiring systematic maintenance and monitoring; an issue that has been highlighted for more than a decade but remains unresolved.

Recent news

Last week, the roof of an abandoned single-storey house in Larnaca collapsed, which had not been identified as one of the many dangerous buildings in the district. However, the adjacent building had been listed as dangerous. Authorities say both buildings will be demolished.

Reviewing the latest figures reported in the local media, around 4,000 dangerous buildings have been identified in Cyprus, but the numbers are increasing as more buildings are inspected. But it’s not been reported how many of these will require demolition.

The 5% VAT reduction on primary residences: what changed in 2026

Maria Kokoridi
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The 5% VAT reduction on primary residences: what changed in 2026

The purchase of a newly built property in Cyprus is subject to Value Added Tax at the standard rate of 19%. However, the VAT legislation provides individuals purchasing a brand-new property as their primary and permanent residence with the opportunity to benefit from a significantly reduced VAT rate of 5%.

This reduction can result in a saving of tens of thousands of euros and has, over the years, proven to be one of the most significant financial incentives available to homebuyers in Cyprus. It is important to note that VAT does not apply to resale properties – it is charged exclusively on the first purchase of newly built properties.

This article provides an overview of the current legal framework governing VAT on new-built properties in Cyprus and the latest legislative developments.

The 2026 VAT amendment

By virtue of an amending law published in the Official Gazette of the Republic of Cyprus on 24 April 2026 (Law 109(I)/2026), the transitional provisions of Law 42(I)/2023 have been extended in certain cases until 31 December 2026. Specifically, the amending law provides that the Tax Commissioner may examine applications submitted under the relevant article until 31 December 2026, where the examination was not completed in time due to delays attributable to the planning authorities.

Following the publication of the amendment, the Tax Department issued a clarification setting out the cases to which the extended deadline applies. The extension applies to cases where the planning permit application was submitted or the planning permit was issued by 31 October 2023, and the building permit was issued after 1 January 2025 or will not have been issued by 31 December 2026. Where the building permit has not yet been issued at the time of the application, the application for the reduced VAT rate must be accompanied by the application for the building permit, so that the Tax Commissioner may examine the reasons for the delay in its issuance.

It is important to note that buyers who wish to apply for the reduced VAT rate of 5% under the old rules, in respect of a property for which the planning permit application was submitted or the planning permit was issued by 31 October 2023 and the building permit was issued on or before 31 December 2024, must submit their application to the Tax Commissioner by 15 June 2026, as the original deadline continues to apply to those cases.

The old VAT rules

Prior to June 2023, the reduced VAT rate of 5% applied to the first 200 square metres of the buildable area of a primary residence, with no restrictions on the value or the total size of the property.

This meant that buyers of large, high-value properties could equally benefit from the reduced rate, with 5% applied to the first 200 square metres and the standard rate of 19% applied to any area exceeding that threshold.

The 2023 VAT reform – Law 42(I)/2023

The amending Law 42(I)/2023 was published in the Official Gazette of the Republic of Cyprus on 16 June 2023, introducing stricter eligibility criteria for the reduced VAT rate of 5%.

Under the new framework, the reduced rate of 5% applies to property purchases, subject to the following conditions:

  • The first 130 sq. m. of a newly constructed property, provided that the total buildable area does not exceed 190 sq. m., and
  • A property value of €350,000, provided that the total transaction value does not exceed the amount of €475,000.

There are exceptions to the above rules for individuals with disabilities.

The initial transitional period

Taking into consideration that many buyers had already entered into commitments under the old rules, the 2023 legislation included a 3-year transitional period. The old rules continued to apply to any project for which a planning permission application had been submitted to the competent authority on or before 31 October 2023, meaning the reduced rate of 5% applied to the first 200 square metres with no value or size restrictions. Under this arrangement, the old and new frameworks operate in parallel from 16 June 2023 until 15 June 2026.

Importance of the 2026 amendment

The significance of this amendment should not be underestimated. The financial difference between the two VAT regimes can be considerable, and for eligible buyers, the more favourable VAT framework can result in a substantially lower VAT liability compared to what would apply under the current rules introduced by Law 42(I)/2023. The extended deadline provides a time-limited opportunity for eligible buyers to still benefit from the more favourable framework that existed prior to the 2023 reform – a framework that, for many years, represented one of the most attractive incentives for homebuyers in Cyprus.

Conclusion

The 2026 amendment is a welcome development for buyers who are considering the purchase of a new-built property in Cyprus and who may still be in a position to benefit from the more favourable VAT framework. Following the clarification issued by the Tax Department, the scope of the amendment is now clearer and its potential financial significance for eligible buyers is undeniable.

Any interested buyer is strongly advised to seek legal advice in order to assess their individual circumstances and determine whether they may benefit from the more favourable VAT framework.

If you are considering purchasing a new-built property in Cyprus and wish to understand how the current rules may affect you, please do not hesitate to contact us.

This article is intended for general information purposes only and does not constitute legal advice. Specialist advice should be sought in respect of your specific circumstances.

Maria Kokoridi
Senior Associate at Philippou Law Firm

Cyprus launches €20m home energy grant scheme: who qualifies

Nigel Howarth
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Cyprus launches €20m home energy grant scheme: who qualifies

A new €20 million funding round to improve the energy efficiency of homes in Cyprus is set to open for applications in September, according to the Ministry of Energy, Commerce and Industry.

The third call under the “Save-Upgrade Houses” scheme will bring the total funding available through the THALEIA programme to €85 million, Energy Minister Michalis Damianos confirmed at a press briefing.

The initiative offers grants of up to €32,000 per property, depending on the scale and type of works.

What’s covered under the energy grant scheme?

Eligible improvements focus on boosting energy performance and reducing household bills. These include:

  • Thermal insulation
  • Replacement of windows and doors
  • Installation of shading systems
  • Upgrades to heating and cooling systems
  • Solar water heating systems
  • Photovoltaic (solar panel) systems, with or without energy storage
  • Services from certified energy experts

Homeowners can arrange site visits with specialists to secure an Energy Performance Certificate and begin planning works ahead of the application window.

Who qualifies for the €32,000 energy grant?

The scheme is aimed exclusively at private individuals upgrading existing homes. To qualify:

  • The property must have been built before 1 January 2008
  • It must be owned by a natural person (not a company)
  • It must have a domestic electricity account with the Electricity Authority of Cyprus
  • The property must have been connected to the grid before 1 January 2008, or have had planning permission submitted before 21 December 2007

Additional support is available for vulnerable households, homes in mountainous areas, and refugee housing, with grants increased by 20% in these cases.

Faster payments promised after earlier delays

Officials acknowledged that the previous funding round faced delays due to a surge in payment claims submitted simultaneously last summer.

In response, the Ministry has introduced reforms to speed up processing. Applications will now be assessed based on risk, allowing low-risk claims to be approved more quickly and in some cases, without on-site inspections.

Low-risk cases include smaller grant requests, applications submitted by trusted professionals, and projects involving limited works.

The Ministry also worked with the European Commission to enable more flexible inspection procedures, easing administrative bottlenecks.

Strong demand keeps scheme running

Mr Damianos said the scheme continues due to sustained demand, giving more households the opportunity to apply – particularly those who missed earlier rounds.

However, the budget for this third call is reduced to €20 million, down from €30 million in the previous round, reflecting significant funding already allocated.

He emphasised that the scheme is not only an environmental measure but also part of broader social policy, helping households cut energy costs, improve living conditions and contribute to national and EU climate targets.

Applications open September

Online applications are due to open in September, with a full implementation guide to be published on the Ministry’s website. Details may be found on the Service of Industry and Technology website and a dedicated helpline (17107) will also be available.

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