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Housing Affordability Crisis In Cyprus: Policy Reforms And Economic Implications

by THEFUTURE.TEAM

November 21, 2025

At the 4th Akel Economy Forum in Nicosia, leading policymakers and industry experts issued a decisive call for comprehensive reforms to address the mounting housing affordability crisis in Cyprus and across the European Union. Conversations centered on introducing tighter controls over property purchases by third-country nationals, accelerating licensing processes, and establishing a unified housing authority to ensure balanced market practices.

Addressing Housing Vulnerabilities

Discussions, framed under the theme ‘Mass Real Estate Purchase And Housing Crisis: Right Or Privilege?’, featured contributions from figures such as Akel MP Aristos Damianou, MEP Ilaria Salis, Constantinos Constanti of the Scientific And Technical Chamber (Etek), and Stelios Gavriil, President Of The Association Of Building Contractors (Oseok). Their analysis revealed that both national and European initiatives have thus far fallen short in arresting the relentless climb in property prices and rents, systematically excluding low- and middle-income households from the market.

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EU Policy And The Role Of Brussels

MEP Ilaria Salis observed that the demand pressures in Cyprus echo challenges seen in major Italian cities and other EU locales. She noted that while Brussels is poised to unveil an action plan by mid-December, there has been minimal consultation with the European Parliament—a gap that could undermine the robustness of future housing legislation. Salis warned that existing EU policies overly favor private interests, offering little support for rent regulation or the development of public and social housing.

Strategic Shifts In Housing Policy

Advocating for a paradigm shift, Salis emphasized the need to reconceptualize housing as a social right and curb the allure of disproportionate profits. She proposed policy measures that include:

Implementing democratic and collective contracts that incorporate rent caps linked to income, ensuring housing costs do not exceed 30 percent of monthly earnings.
Enforcing limits on short-term rentals to promote long-term affordability.
Commencing sizable investments in public and social housing, with urban renewal projects featuring a mandated percentage of non-market units, partly funded by European resources.
Institutionalizing citizen participation via community associations to directly shape housing policy, alongside establishing EU-wide standards to shield households from eviction.

Local Initiatives And Broader Economic Impact

Local governmental bodies also offered targeted proposals, ranging from restricting property sales to third-country nationals and repurposing vacant units, to streamlining planning permits. Etek introduced fiscal incentives such as reducing VAT to 5 percent for renovation projects, reforming the ‘renovate-to-rent’ scheme, and taxing idle land to incentivize development.

MP Aristos Damianou highlighted that Akel’s comprehensive housing policy package, currently embodied in two newly proposed bills, aims to enhance access to affordable housing as the government transitions away from unsustainable models like the now-defunct golden passport scheme. He argued that an open economy naturally recalibrates in response to emerging market opportunities, setting the stage for more socially balanced development.

A Decade Of Strategic Change

Industry leader Stelios Gavriil underscored the necessity of refining existing housing schemes to broaden beneficiary eligibility. He urged that financial institutions ease the path for young couples—especially regarding down-payment requirements for bank loans—and called for a forward-looking, ten-year national housing strategy.

In summary, the forum underscored the urgency for both local and EU-wide reforms, positioning housing not merely as a commodity but as an essential social right. As policymakers and market leaders align on these initiatives, the evolving landscape may well offer a blueprint for resolving the housing crises confronting many modern economies.

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IMF Says Cyprus Growth Will Ease As Energy Costs And Regional Tensions Weigh On Economy

by THEFUTURE.TEAM

June 24, 2026

Cyprus is expected to remain among the better-performing economies in the European Union, although growth is projected to moderate this year as higher energy prices, geopolitical uncertainty, and softer tourism activity weigh on economic momentum.

Growth Set To Moderate After A Strong Run

In its latest Article IV Consultation, the International Monetary Fund (IMF) noted that the Cypriot economy has remained resilient despite a challenging external environment. However, the Fund expects growth to slow compared with last year as rising energy costs and regional tensions begin to affect household incomes, business confidence, and tourism flows.

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“Growth is expected to moderate this year as higher energy prices and geopolitical tensions weigh on real incomes, tourism and confidence,” the IMF said.

The Fund projects GDP growth of 2.6% in 2026, compared with 3.8% in 2025. Under a more adverse scenario involving a prolonged crisis in the Gulf region, growth could slow further to 1.7%.

Inflation Is Turning Higher Again

Alongside slower growth, inflation is expected to increase in the near term after easing significantly last year. According to the IMF, higher energy costs linked to developments in the Middle East are beginning to feed through to consumer prices.

“Inflation is projected to rise in the near term before easing. Risks are tilted to the downside, notably from a more prolonged war in the Middle East, tighter global financial conditions and weaker external demand. Medium-term prospects are more balanced, supported by strong fundamentals and reform momentum,” the Fund said.

The harmonised inflation rate, which declined to 0.8% in 2025, is forecast to rise to 3.5% this year before easing again to 1.5% in 2027.

Tourism Softens, But Fiscal And Financial Buffers Hold

While the IMF pointed to signs of weaker tourism activity, it said the broader economy continues to benefit from strong fiscal and financial fundamentals.

“Fiscal performance has remained strong, with continued surpluses and public debt declining below 60 per cent of GDP. The financial sector is sound, with strong capital and liquidity buffers and improving asset quality,” the report noted.

Domestic demand remains resilient, while exports of services continue to support economic activity. Sectors such as information and communications technology and tourism are expected to remain important contributors to growth, helping Cyprus maintain one of the strongest economic performances within the EU.

A Recovery Built On Policy Discipline

The IMF praised the Cypriot authorities for maintaining a strong fiscal position, rebuilding policy buffers and putting public debt on a clear downward trajectory. It also pointed to the country’s remarkable rebound since the 2013 banking crisis. Per capita GDP, measured against the EU average, has now returned to pre-crisis levels.

That said, the Fund urged policymakers to keep focusing on the quality of public finances. It said Cyprus should improve the efficiency of spending and taxation, prioritise high-quality public investment and maintain discipline in public wage growth.

Any support for households, the IMF added, should be temporary and tightly targeted. It welcomed the government’s recent comprehensive tax reform and a proposal to build financial assets in the social security fund.