Cyprus is one of the few EU countries where house prices have fallen over the past 13 years. This is according to statistics from Eurostat.
In the third quarter of 2023, both house prices and rents in the EU as a whole rose by 0.8% compared to the second quarter of 2023. Compared to the third quarter of 2022, house prices in the EU fell by 1%, while rents rose by 3%.
Similar dynamics of house price and rent growth in the EU were observed between 2010 and the second quarter of 2011. After that, house prices rose sharply, albeit with some fluctuations, while rents rose gradually but steadily.
After a sharp decline between the second quarter of 2011 and the first quarter of 2013, house purchase prices remained more or less stable between 2013 and 2014. In early 2015, there was a rapid increase. Purchase prices rose faster than rents until the third quarter of 2022. Since the fourth quarter of 2022, purchase prices have fallen for two consecutive quarters before starting to rise again in the second and third quarters of 2023.
Over the period under review, i.e. from 2010 to 2023, house prices rose more than rents in 18 of the 27 EU countries. The strongest growth was observed in Estonia (+210%), Hungary (+185%), Lithuania (+158%), Latvia (+141%), Austria (+123%), Czech Republic (+122%) and Luxembourg (+107%). Price declines were observed in Greece (-14%), Italy (-8%) and Cyprus (-2%).
Rents rose in 26 EU countries, with the largest increases in Estonia (+218%), Lithuania (+170%) and Ireland (+100%). The only decline in rental prices over this period was recorded in Greece (-20%).
The reasons for the decline in house prices in Cyprus are complex and multifaceted. Some of the factors that have contributed to the decline include:
- The economic crisis of 2012-2013
- The collapse of the Cypriot banking sector
- The implementation of a strict austerity program
- The high level of unemployment
- The large number of foreclosures
- The decline in foreign investment
The decline in house prices has had a number of negative consequences for the Cypriot economy. It has led to a decline in construction activity, a decrease in government revenue, and an increase in the number of non-performing loans.
The government of Cyprus has taken a number of measures to try to address the problem of falling house prices. These measures include:
- The provision of financial assistance to homeowners who are struggling to meet their mortgage payments
- The introduction of a new foreclosure law
- The establishment of a housing association to help people buy or rent affordable housing
It remains to be seen whether these measures will be enough to reverse the decline in house prices in Cyprus. However, the government is committed to addressing the problem and is working to create a more stable and sustainable housing market.
