The real estate market has faced a giant problem.

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

Marinos Chineiro, chairman of the Board of Registration of Real Estate Agents, said that the time has come for the government to intervene. He emphasized that rising prices of building materials, high interest rates and inflationary pressures are "individually and collectively putting pressure on the purchasing power of citizens." As a result, people are reconsidering their plans to buy a house or apartment.

Chineiro added that any new five percent VAT rules for the purchase of first homes is also expected to impact demand.

Since March 2022, the European Central Bank has raised interest rates from -0.50% to 3.25% - and it is expected that this is just the beginning, he said. In Cyprus, the interest rate on home mortgages rose to 4.67% in March this year, up from 2.16% a year earlier.

"Unfortunately, we are now witnessing unfortunate circumstances and people's desperation. We are seeing rents that were €500 go up to €700 or €800 after the contract expires, leaving people in a difficult situation," he said.

Over time, "we will be moving into uncharted waters" and so the government should address this 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 AirBnB."