Price reductions in real estate caused by market factors may be short-lived.

The real estate market in Cyprus, according to the president of the Cyprus Council for the Registration of Real Estate Agents, Marina Kineyrou, is preparing for a challenging year. Prices are expected to decline due to market factors, but these drops may be offset by disruptions in supply chains caused by geopolitical conflicts. In her recent analytical article, Kineyrou noted that 2023 could be difficult, considering the many issues inherited from the previous year.“We are still experiencing the consequences of the 2020-2021 pandemic and the conflict in Ukraine that erupted in February 2022, which continues to impact the market,” he said.

Moreover, the high inflation rates led to a significant increase in interest rates by the European Central Bank (ECB) in 2023, which raised borrowing costs until October, when the rate hikes were paused.

According to this data, the following was recorded in the first nine months of 2023:

• 8,681 real estate transactions worth €1.4 billion
• 9,374 sales agreements totaling €3.3 billion

However, in the fourth quarter, the Councils expect a decline in these parameters, which may indicate a worsening market situation.“The main factor influencing demand from both local and international buyers is the sharply rising real estate prices,” he added.“It is important to emphasize that the prices for real estate for sale or rent are set by the owners, not the agents,” he clarified.

In addition, Kineyur mentioned the recent Eurostat results, which reflect a decrease in the percentage of Cypriots who are able to afford their own housing.“Many people are returning to their parents' homes, trying to cope with financial difficulties in buying or renting,” he continued.“The increase in living expenses, high housing prices, and rising loan costs often lead banks to consider young clients seeking loans for real estate purchases as financially unstable,” he added.

Kineyru once again emphasized that“We previously warned both the current and the previous government that as housing prices rise, more people will turn to renting, which will exacerbate the problem.”He explained that the situation is exacerbated by a new trend where homeowners are opting for short-term rentals.“Unfortunately, we are witnessing a situation that we predicted, where rental prices reach levels equivalent to a full month’s salary,” he stated.

At the same time, the council president noted that, as a rule, market factors are expected to come into play in 2024, leading to some decreases in prices for residential real estate and apartments, primarily due to promotions and discounts.“There are already some steps being taken by property owners in this direction, who are trying to attract buyers' interest and sell their properties,” he said.

Nevertheless, Kineyru warned about the uncertainty that the market may face in 2024, considering the ongoing conflict in Ukraine and recent events in Gaza. He noted that information about the potential expansion of the conflict to Lebanon is causing increasing concern.“It is clear that the consequences of the sharp reduction in the transit of ships through the Suez Canal will soon be felt in the Cypriot economy, especially in the real estate market,” concluded Kineyur.“The likely increase in prices for raw materials and construction resources may keep real estate prices, especially for new builds, at a high level,” he concluded.