Cyprus Central Bank To Raise Countercyclical Buffer Rate To 1.5% Amid Rising Systemic Risks

by THEFUTURE.TEAM

January 15, 2025

The Central Bank of Cyprus (CBC) has announced plans to raise the countercyclical buffer rate (CCyB) from 1% to 1.5%, with the change set to take effect on 14 January 2026. The decision, disclosed on 10 January 2025, aims to strengthen the resilience of the banking sector in light of growing systemic risks.

The CCyB is a regulatory tool that requires banks to maintain additional capital during periods of heightened economic risk. This buffer helps absorb potential losses, ensuring financial stability and the continuous flow of credit to the economy during times of stress.

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Rising Risks Prompt Policy Action

The CBC’s quarterly assessment identified an uptick in systemic risks, driven by geopolitical developments, economic turbulence, and potential tail events in the global economy. Factors contributing to this heightened risk include:

Escalation of the Middle East conflict.
Continued globalization of the war in Ukraine.
Growing protectionist measures led to new trade restrictions.

These risks, according to the CBC, threaten the domestic macroeconomic environment and, by extension, the stability of the banking sector.

Broader Concerns At The EU Level

The CBC’s decision aligns with concerns raised by European institutions.

The European Systemic Risk Board (ESRB) highlighted in its December 2024 press release the need for enhanced resilience across the EU financial system amid heightened political uncertainty and geopolitical tensions.
The European Central Bank (ECB), in its Financial Stability Review, stressed the importance of ensuring banks maintain sufficient capacity to absorb losses during periods of economic stress.

Enhancing Resilience Through Increased Buffers

By raising the CCyB rate to 1.5%, the CBC aims to channel a portion of bank profits towards creating a larger buffer of loss-absorbing capital. This measure is intended to:

Strengthen the ability of banks to withstand potential crises.
Ensure the uninterrupted flow of credit to the real economy, even in times of economic stress.

The CBC emphasized that the previous rate of 1% was insufficient given the prevailing risk landscape and that the increased buffer will enhance the banking sector’s capacity to navigate future challenges.

This proactive adjustment reflects a broader commitment to safeguarding financial stability in Cyprus while aligning with EU-wide efforts to reinforce the financial system’s resilience.

The Future Forbes Realty Global Properties

Cyprus Permit Delays Can Add €61,000 To The Cost Of A New Home

by THEFUTURE.TEAM

August 25, 2026

Housing affordability in Cyprus is being affected not only by property prices, construction costs and interest rates, but also by delays in securing planning and building permits. For developers, years of waiting can add millions of euros to project costs and tens of thousands of euros to the price of an individual home.

Property Prices And Rents Continue To Rise

House prices in Cyprus rose 3.4% year on year in the first quarter of 2026, according to Eurostat, leaving prices about 50% above their 2015 level. Rents have also continued to increase, with the Cyprus Statistical Service reporting annual growth accelerating from 2.5% in January to 4.5% in April.

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Strong demand and limited supply are adding pressure to both markets. Delays earlier in the development cycle can further restrict the number of homes reaching the market.

Four-Year Delay Adds €6.3 Million To Project Costs

A recent analysis by Yiannis Misirlis, chairman of the Cyprus Land and Building Developers Association, illustrates the financial impact. The example involves a 125-apartment project with €7 million allocated to land and an estimated €25 million for construction, bringing the initial cost to €32 million.

If permits are secured within six months, the average sale price would be about €307,000 per apartment. A four-year permitting delay, however, would add about €1.7 million in financing costs tied to the land, €800,000 in additional overheads and €3.8 million from construction cost inflation.

Combined, those costs would add about €6.3 million to the project without increasing the developer’s profit. The average apartment price would rise to about €368,000, adding roughly €61,000 to each unit.

Delays Also Affect Rental Supply

Higher development costs can affect renters as well as buyers. When projects are delayed, fewer homes enter the market over a given period, limiting supply while demand continues to grow.

Build-to-rent projects face the same pressures from land costs, financing, overheads and construction inflation. Developers may ultimately pass some of those additional costs through to rents.

Government Moves To Increase Housing Supply

Reducing permitting times would not require weaker planning controls or construction standards. More predictable approval timelines would instead allow developers and investors to plan projects with greater certainty and reduce the costs associated with prolonged delays.

The Ministry of Interior has introduced planning incentives and additional building coefficients that are expected to support the construction of more than 2,500 homes over the next two years. The measures are intended to increase housing supply in a market where demand remains strong.

Permitting Delays Have A Direct Financial Cost

For developers, longer approval periods increase financing and overhead costs while exposing projects to higher construction prices. Those costs can ultimately affect sale prices, rents and the number of homes that reach the market.

Cyprus’ housing affordability challenge therefore extends beyond land and construction costs. The time required to move a project from planning to construction can also determine how much buyers and renters eventually pay.

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