The real estate market is facing a 'giant problem'.

Real estate experts warned Tuesday that problems in the real estate market have become a "giant problem" as the impact of external factors, including inflation and high interest rates, are increasingly felt by consumers and builders alike.

Marinos Kineiro, chairman of the Real Estate Agents Registration Board, said it was time for government intervention. He emphasized that rising prices of building materials, high interest rates and inflationary pressures are "individually and cumulatively putting pressure on the purchasing power of citizens." As a result, the public is reconsidering their plans to buy a house or apartment.

Kineiro added that any new value-added tax regulation of five percent on the purchase of first homes is also expected to affect demand.

The European Central Bank has raised interest rates from -0.50 percent to 3.25 percent since March 2022 and they are expected to rise further, he said. In Cyprus, the mortgage interest rate rose to 4.67 percent in March this year, up from 2.16 percent a year ago.

"Unfortunately, we have witnessed unfortunate circumstances and people's desperation. We see rents that were at €500 going up to €700 or €800 after the end of the contract, making it hard for people to cope," he said.

As time goes on, it seems that "we are getting into uncharted waters," which is why the government needs to address the issue, Kineiro said. "We need to review the government's housing policy, rentals and even issues related to the provision of houses and apartments to vacationers and short-term rentals such as through Airbnb."