The arrival of persons fleeing the war in Ukraine, population growth and the settlement of new businesses, workers and their families from non-EU countries have exaggerated Cyprus’s housing shortage since 2022, Interior Minister Constantinos Ioannou said on this week.
Ioannou was replying to a written question from ALMA parliament member Litsa Drousiotou, who asked how rents could have risen by about 56.5 per cent between 2020 and 2025, and by a further 7.36 per cent in 2026, when thousands of building permits had been issued and 8,692 new homes built in 2024 alone.
Drousiotou said the continued rise in rents, despite thousands of new homes being completed, raised questions over whether building more homes alone would make housing more affordable, without first measuring the actual housing shortfall and what drives demand.
Ioannou said increasing supply was a basic precondition for gradually bringing the market into balance and easing pressure on prices and rents. But prices also depend on location, the type of property, construction and financing costs and how demand develops, he said, so it was impossible to predict accurately how far, or how soon, more housing would bring down prices and rents.
The housing problem worsened as Cyprus, like other European economies, faced a series of external challenges from 2022 that affected both the supply of and demand for homes, the minister said. International inflation and higher prices for energy, raw materials and building materials significantly raised construction costs and affected building activity.
At the same time, demand rose sharply, driven among other things by population growth, the arrival of people displaced from Ukraine and the settlement of new businesses, workers and families as economic and investment activity increased.
The non-EU workers referred to are understood to be employed by specialised companies that moved to Cyprus after legislation was passed to attract them.
Building permits
Ioannou said 8,159 building permits were issued in 2025, up 19.5 per cent from 6,827 in 2024, while the number of homes they provide for rose by 42.7 per cent.
The trend has continued this year. From January to May 2026, 3,650 permits were issued, up 32.1 per cent from 2,764 in the same period of 2025. The number of homes they provide for rose by 63.7 per cent, from 5,484 to 8,978.
Incentive schemes
Ioannou said a central aim of government policy was to increase the housing stock, particularly affordable housing, alongside measures to make it easier for people to find a home.
He pointed to the planning incentive schemes and the ‘Build to Rent’ scheme, which allow developers extra building density in return for producing more homes, including affordable units. According to the latest figures he cited, interest in the schemes could produce more than 4,000 homes over the next two years, of which about 1,400 would be sold at a discount as affordable housing.
Developers buying extra building density are also expected to pay more than 22 million euros into the Cyprus Land Development Corporation’s Special Affordable Housing Fund, to finance more affordable homes, he said.
Neither figure is guaranteed. Both are based on permits issued and depend on the homes actually being built.
Schengen
Asked whether Cyprus joining the Schengen area could make its ‘golden visa’ scheme more attractive and push up demand for property, Ioannou said it was “not possible, at this stage, to assess with certainty” whether or how far demand and prices would be affected. Joining could affect demand, particularly if it led to greater mobility of workers, businesses or investors, he said.
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