Dorita Yiannakou
I am not sure we can call it a bubble, at least not in the sense of the one Cyprus experienced between 2006 and 2008, when the economy saw unprecedented growth driven by excessive borrowing and speculative buying. Still, what we are witnessing today is a troubling development. I am referring to the price race the real estate sector has been running for quite some time now, a rally that is also producing negative spillovers for housing affordability.
Cypriot real estate entered 2026 following a prolonged upswing that began after the pandemic, fueled by increased investment activity, a tourism boom, and the gradual restoration of confidence in the sector. By now, however, the situation appears to have moved beyond what could be considered normal. This is being felt both by Cypriots, especially young couples struggling to find affordable housing, and by foreign residents and investors, many of whom are beginning to grow uneasy about elevated prices.
In Limassol in particular, property prices, both residential and commercial, have for some time appeared to have no ceiling. A decisive factor remains the imbalance between supply and demand. The shortage of new housing stock, combined with high construction and land costs, continues to keep prices at elevated levels.
Of course, high property prices are not a uniquely Cypriot phenomenon; they are a pan-European issue. Across the European Union, housing prices rose by more than 60% between 2013 and 2024, far outpacing income growth. Rents have also been climbing, while investment in new housing construction continues to fall short of actual needs. According to European Commission estimates, the continent requires more than two million new homes annually, yet only about 1.6 million are currently being built, creating a persistent and widening supply gap.
In Cyprus, data from the Central Bank show that demand in the property market remained strong throughout 2025. This picture is reinforced by Land Registry figures, which record increased activity in property transactions.
That said, the landscape appears set to begin shifting in 2026. Although prices remain high, early signs of a slowdown are emerging as the financial resilience of both buyers and renters comes under growing pressure.
Local buyers are increasingly turning toward more affordable options, primarily smaller apartments, while foreign interest in luxury properties continues, though with signs of greater restraint. At the same time, foreign buyers have made significant purchases in Larnaca, where prices remain lower than in Limassol.
Overall, 2026 is expected to be a year of stabilization for property prices. The prevailing assessment is that prices will broadly remain at 2025 levels, without a significant decline. District-level indicators suggest modest increases in areas of strong demand, such as Limassol and Larnaca, without any sign of a generalized easing.
As such, 2026 is unlikely to bring abrupt disruptions. Instead, it appears set to function as a pivotal transitional phase. The housing market is entering a period of testing and rebalancing. What remains unresolved, however, is the issue of affordable housing.
The government has taken steps in this direction, moving ahead with the construction of 500 homes on state land at a cost of approximately €7 million, in an effort to address the housing crisis. No one expects this initiative to solve the problem. But it is a beginning.
While property prices may be edging toward stabilization, existing distortions are becoming increasingly visible, and the housing question is emerging as a decisive social and economic challenge for the years ahead.
