Andreas Andreou
Around 20-25 years ago, Cyprus was renowned for having one of the highest rates of home ownership globally, with figures nearly reaching 78% - 80%, as per the data available then. This statistical achievement often garnered admiration during discussions, both substantive and academic, as such high rates were uncommon in comparable contexts abroad.
This perception suggested a stable, almost constant variable rather than a subject of ongoing research interest. However, over the past quarter-century, the landscape has shifted significantly. Today, Cyprus' home ownership rate stands at 69.8%, a notable decrease from the 78% - 80% observed previously. Conversely, the rental rate has surged from approximately 20% - 22% to its current 30.2%.
Comparatively, these figures align closely with the European Union average, where home ownership averages 69.9% and rentals make up 30.1%. Countries like Romania lead with over 94% home ownership, while others such as Slovakia, Hungary, and Croatia also exceed 90%. Meanwhile, nations like Norway, Lithuania, and Poland maintain rates above 78%.
Examining dwelling preferences within Cyprus, approximately 73% of homeowners prefer houses, with the remaining 27% opting for apartments. In contrast, the EU average leans towards apartments, chosen by around 47% of residents.
Several socio-economic factors underpin these shifts:
1. A rapid rise in property prices driven by increased demand, both domestic and foreign, and a sluggish supply response.
2. Previous over-lending practices that artificially inflated reported home ownership rates.
3. Prolonged wage stagnation exacerbated by recent inflationary pressures.
4. The 2009-2012 financial crisis and subsequent 2013 bankruptcy, which reset home ownership rates to more realistic levels.
5. Decreased parental financial support for housing acquisitions over time.
6. Growing investment in income-generating properties, diverting capital from home ownership.
7. Changing lifestyle preferences among younger generations favouring early independence and smaller, rental-friendly accommodations.
8. Delayed family formation, pushing home ownership decisions to later stages of life.
9. Long-term demographic trends impacting housing choices.
10. Increasing divorce rates affecting home ownership dynamics.
11. Growth in foreign student and employee populations contributing to higher rental demand.
Looking ahead, Cyprus appears to be mirroring broader European housing trends, albeit with concerns about resembling older European nations. Future projections anticipate a continued shift towards apartment living, driven by financial considerations and personal preferences.
Mr. Andrew A. Andreou, MRICS, serves as CEO of APS Andreou Property Strategy-Chartered Surveyors.
[This article was translated from its Greek original]
