NEW INCREASES IN REAL ESTATE ARE COMING DUE TO ENERGY CRISIS - WHICH BUILDING MATERIALS ARE AFFECTED - Filenews 11/4 by Theano Thiopoulou
Developments in the Middle East bring new data to the real estate market. On the one hand, there is the increase in energy costs and therefore in construction costs, the combination of which emerges as the most critical factor for the course of prices.
The numbers show that geopolitical tensions in the Middle East and energy price increases internationally are expected to affect property prices under construction, which may move upwards, especially in areas with high demand.
In addition, the supply chain continues to come under pressure, especially under the weight of geopolitical risks and disruptions in key maritime transport routes, leading to higher material costs.
As expected, oil "hits" building materials and leads to price increases in basic materials (iron, cement, bricks), affecting the final cost of construction activity.
The Central Bank, in its report on property prices, states that the Statistical Service's construction materials price index recorded a marginal annual increase of 1.4% in the fourth quarter of 2025, remaining at historically high levels in recent years, a result of geopolitical developments and supply chain disruptions. The rise was recorded before the war in the Middle East began and began to leave its imprint on fuel prices.
Materials that require enough energy to produce, such as cement, steel, ceramics and insulation, are expected to increase further in the coming period, due to the increase in energy prices. Heavy machinery (excavators, cranes) runs on significant amounts of fuel, increasing the cost per hour of work. The current situation comes in addition to the already significant effects caused by the previous crisis due to the pandemic and especially the war in Ukraine, which led to extensive increases in energy, fuel, transport and material prices.
The latest data from the Statistical Service show that in February there were further price increases in construction materials, of the order of 0.95% and there is still no effect on the price war, which started on February 26.
In particular, price increases were recorded, on an annual basis (compared to the same period last year) in basic materials necessary for the construction industry: crushed sand for concrete (7.55%), ready-mixed concrete (2.99%), gypsum (2.75%), marbles (4.25%), granites (0.21%), slabs, mosaics and concrete bricks (1.78%), tiles (3.68%), industrial timber (plywood, MDF, laminated parquet (1.11%), cabinets and countertops (1.55%), doors and windows (0.68%), thermal insulation materials (6.46%), paints and solvents (0.53%), water tanks (1.64%), plastic pipes (5%), PVC doors and windows (0.78%), iron and steel products (-1.76%), structural mesh (-3.27%), iron railings (3.03%), roofs, sheds and plasterboard metal installation parts (0.53%), steel pipes (1.47%), stainless steel sanitary ware and kitchen utensils (1.26%), aluminium doors and windows (-1.04%), Locks, hinges and handles (6.33%), electrical equipment (4.49%), cables (7.73%), sockets, switches, fuses and insulators (1.79%), burners and boilers (0.26%), central heating radiators (-2.74%), air conditioning devices (-0.43%), solar and electric water heaters (2.39%), elevators (4.15%).
The cost of houses increased by 25.40
Usually what monopolizes the interest is the cost per square meter in the construction of houses. The data of the Statistical Service give a taste of where the prices per square meter have reached, although these data are not representative for all types of building, since the materials, the degree of luxury and the functional purpose differ from building to building.
According to what construction professionals reported to "F", the cost per square meter for the construction of a house or apartment on average ranges from €1500 and reaches up to €2,500 for modern, energy-upgraded luxury constructions (luxury).
It should be noted that the above prices are estimates and may vary depending on the construction company, the location and the specifics of the project.
The latest available data provided by the Statistical Service is until 2024, shows the rising construction price per square meter recorded over time in the last decade. The average construction cost per square meter for houses was €1,328, an increase of 9.39% compared to the previous year.
The average construction cost per square meter for apartments was €1,082, showing an increase of 0.65%. If we compare a few years back with 2020, the cost per square meter for houses has increased by 25.40% and for apartments by 9.07%.
In more detail, to show the differences each year, the average cost per square meter for a house in 2023 was €1,214 and €1,075 for apartments, while in 2022 it was €1,188 and €1,169 per sq.m respectively, remaining stable compared to 2021.
In 2020, the average construction price per sq.m for houses was €1,059 and for apartments €992. The average cost for a house in 2019 was 1,033 euros, while in 2010, when there was overheating in real estate, the average construction price was 920 euros. The construction of an apartment is slightly lower and the price per sq.m is estimated at 940 euros, while in 2010 it was €807 per sq.m.
If we go back even further, in 2015, the average construction cost per square meter for houses was €1,009 and for apartments €840 and in 2014 at €989 and €895 respectively. In 2013 the average construction cost per square meter for houses was €976 and for apartments €900 and in 2012 it was €988 and €834 respectively.
Concerns about price increases
The European Commission's EOS (December 2025) expectations index for property prices over the next three months demonstrates the trend recorded in house prices compared to the quarter under review, since it is at a higher level in the fourth quarter of 2025 (29.1) compared to the corresponding period last year (25.5).
This suggests that a larger proportion of participants expect increases in property prices in Cyprus in the next three months.
In addition, according to the same source (European Commission's EOS), the labour shortage observed in recent years in the construction sector, according to the perceptions of the companies participating in this survey, exerts upward pressure on prices in the real estate market.
The reported labour shortages are also in line with wage increases in this sector, which for the whole of 2025 are higher than historical pre-pandemic averages.
At the European level, the picture remains correspondingly upward, and according to Eurostat data, house prices increased by 5.1% in the euro area and by 5.5% in the European Union on an annual basis during the fourth quarter of 2025.
Compared to the previous quarter, prices rose by 0.6% and 0.8% respectively, indicating a continuation of the increase but at a milder pace. At the level of member states, almost all countries recorded an annual increase in prices, with the exception of Finland where there was a decrease of 3.1%.
