Filenews 19 October 2025 - by Angelos Angelodimou
The housing problem has been plaguing Cypriot society for several years. However, lately it seems to have intensified, with the result that securing housing, especially for young couples, has become an illusory dream. Prices have reached levels that are elusive for the average Cypriot, while the part of the rent seems to have in many cases gone beyond the capabilities of the low and middle income class.
However, as it turns out, this problem is not only Cypriot but pan-European. Several countries seem to be faced with the same issue and the reason seems to be the commercialization of housing, i.e. the transformation of housing into an investment product. This has resulted in the mobilization of the European authorities, which are preparing a new legislative framework for the protection of housing and the creation of the conditions for affordable housing.
An investment product and not a social good
More specifically, as explained in a recent article by the CEO of Ask Wire, Pavlos Loizou, housing is no longer treated as a social good and is being turned into an investment product, with owners seeking returns and capital gains, without spending money on the renewal of their property, knowing that regardless of its condition it will be rented. Tenants, on the other hand, are called upon to bear the burden of rising costs, with minimal protection. Globally, this transition is most evident in markets where demand exceeds supply. In Cyprus and Greece – small, open economies with inflows of foreign capital – the consequences are even more pronounced.
This phenomenon of financialization, as it is called, threatens to divide the market, as there are high-quality investment properties on the one hand and an aging, depreciated housing stock for locals on the other. This undermines housing capacity, weakens social cohesion, and erodes the vibrancy of cities. What's going wrong? Obviously the motives, notes Pavlos Loizou. Landlords look at yields, tenants are temporary, and no one is investing in quality, long-term housing.
Almost 50% increases in rents
This situation does not come without repercussions. Which tenants are mainly called upon to deal with. According to data from Ask Wire, rents in Nicosia increased by 48% in the period 2016-2024, while in some areas of Limassol they doubled (Ask Wire data, 2025).
At the same time, in Cyprus there are about 16,000 properties offered for short-term rental, of which only half are officially registered (Deputy Ministry of Tourism, 2024). The annual rate of rent growth remains above 3%, i.e. significantly higher than wage increases.
As for Greece, about 35% of households today rent, compared to 25% ten years ago (Eurostat, 2023). Listings on short-term rental platforms in 2015 were less than 20,000, while in 2024 they exceed 145,000. Of these, more than 40,000 are in Athens (Bank of Greece, 2024). The utilization of properties in this way has led to an increase in long-term rentals of more than 30% since 2018. One in six tenants today spends at least 50% of their income on housing.
A pan-European problem
However, this issue does not seem to concern only Cyprus, but has spread throughout Europe. The withdrawal from the market of a significant housing stock, for the purpose of exploiting it for short-term rental (Airbnb), as well as the phenomenon of financialization, have created a particularly difficult situation for consumers, forcing the European Commission to intervene to correct the situation. Specifically, according to reports a few days ago, the European Commission is preparing in the first stage a new legislative framework to limit short-term rentals, with the aim of dealing with the acute housing crisis that affects citizens in many European cities.
According to the Commissioner for Housing (and Energy), Dan Jorgensen, the initiative is part of the first European plan for affordable housing, which will be presented in December 2025, earlier than the original 2026 schedule.
In an interview with the Guardian and other European newspapers, Jorgensen stressed that short-term rentals are a huge problem for many cities, as they increase rents, displace residents from historic centers and turn neighborhoods into tourist zones.
The Commissioner underlined that housing is now a European issue, warning that inaction "will leave room for anti-European populists, who have no solutions to the housing crisis".
Interest from Cypriots
Besides, in an article on the issue of affordable housing, Interior Minister Konstantinos Ioannou noted that the government's goal is to offer as many citizens and families as possible affordable options for obtaining decent housing.
The integrated policy we designed aims at two axes:
(a) The increase of the housing stock - something that will contain and perhaps reduce the overall prices of real estate - with the addition of affordable housing units.
(b) Strengthening the purchasing power of citizens on the basis of socio-economic criteria. There is increased interest, he noted, both in the projects of the KOAG and in the housing plans implemented by the Ministry of the Interior. Especially for the Under-41 Scheme, after the improvements we have recently made, there is increased interest. To date, around 600 applications have been submitted and 261 have already been approved.
The plan expires on November 30, so there is still the possibility for young people or couples who are beneficiaries to use it. The sponsorship for this scheme ranges from €20,000 to €50,000 depending on the composition and income of the family.
Rents are also soaring in Europe – Proposals from the EU
The situation that has been created across Europe with rents is now worrying. According to Eurostat, from 2010 to 2023, house prices in the EU increased by 48%, while rents increased by 22%.
In fact, in some countries, the increases were explosive: 211% in Estonia, 169% in Lithuania and 98% in Ireland. In 2023, almost 9% of Europeans spent more than 40% of their income on housing, with Greece holding the highest percentage (29%).
The Commission is considering measures to protect tenants and relax state aid rules so that member states can subsidise housing companies or provide tax incentives. At the same time, it is being studied to deal with the "financialization" of housing, i.e. the transformation of housing into an investment product, which – as Jörgensen emphasizes – "creates serious social problems".
It is noted that at the High-Level Conference on Affordable Housing, recently organized in the framework of the Danish Presidency of the Council of the European Union, in Copenhagen and attended by the Minister of Interior Constantinos Ioannou, the European Commissioner for Energy and Housing Dan Jorgensen presented the main pillars of the "European Plan for Affordable Housing", which concern:
• The strengthening of financing programs to Member States for the implementation of affordable housing projects through European funds and the European Investment Bank,
• the review of state aid rules;
• the reduction of red tape and complicated licensing procedures, and
• the regulation of the operation of AirBnB temporary accommodation accommodation.
