By Makis Keravnos
According to a European Commission document released in May 2026, housing prices across the European Union have been rising steadily since 2014 due to increased demand and constrained supply.
As a result, housing availability has been significantly reduced. This has led – and continues to lead – to a widening gap between the cost of acquiring or renting a home and the disposable income of households.
Demand for housing is shaped primarily by income growth among certain population groups, demographic trends and shifts, prevailing financing conditions, as well as other market developments such as short‑term rentals and the entry of institutional investors into the real‑estate market.
The description of housing availability trends at EU level could equally be said to describe developments in Cyprus. This is a natural evolution, given that Cyprus is a full member of the European family and that economic trends, expectations and social needs are influenced by EU policy directions and decisions.
The prevailing view is that constraints on the supply of affordable housing are the decisive factor behind the current shortage.
Housing supply remains persistently inadequate due to regulatory and administrative barriers, bureaucratic procedures, and objective limitations such as land scarcity or high land prices, as well as labour shortages in the construction sector.
At the same time, demand for affordable housing was, for several years, boosted by rising incomes, demographic pressures, low interest rates and other factors.
These developments on both the supply and demand sides of the housing market – as Alfred Marshall would no doubt agree – have culminated in a serious shortage of affordable housing in Cyprus, a problem that is also European in nature.
Addressing this acute challenge requires a package of measures within a broader European policy framework, while taking into account the specific characteristics of individual member states.
The Cyprus case
In Cyprus, further measures are required, including the simplification of regulations and licensing processes; the formulation of policies on land availability and land use; and targeted reforms in education – particularly at secondary level – to ensure the availability of appropriately trained technical personnel.
In addition, reskilling programmes through the Human Resource Development Authority are needed to equip workers with knowledge of new technologies and materials used in construction, alongside incentives to bring vacant or underutilised housing units back into the market.
Policy targeting must focus on the middle class, vulnerable households, young people and young couples, as well as elderly citizens.
From the outset of its term, the government placed the availability of affordable housing among its top priorities. In October 2023, the Ministry of the Interior announced the preparation of a comprehensive housing policy centred on increasing the supply of affordable housing and improving citizens’ access to home ownership through targeted incentives.
To implement this strategy, the government – and particularly the Ministry of the Interior – has put in place a significant number of schemes, allocating many millions of euros.
The continuation of this strategy and its individual policy tools must be based on rational planning and sound programming, so that investment in the construction and provision of affordable housing remains focused on expanding supply. This is essential to avoid imbalances that could have adverse effects and perpetuate the problem.
Supply before demand
Measures that appear, in the short term, to alleviate the problem but do not address its structural causes must be avoided.
Policies that stimulate demand without a corresponding increase in supply will lead to distortions, pushing up housing prices, raising construction costs and ultimately encouraging profiteering – without effectively solving the problem. Such developments may also result in increased fiscal costs.
Therefore, any public resources allocated to tackling the affordable housing challenge must be structured in a way that primarily and rapidly strengthens the supply of affordable housing.
Prioritising supply expansion is not only crucial for improving housing availability; it is also directly linked to easing other major social challenges, including low birth rates and labour mobility. By facilitating the movement of skilled professionals and workers, housing availability supports both employment growth and businesses’ ability to meet their workforce needs.
By implementing the measures outlined above – reducing bureaucracy, simplifying regulations and licensing procedures, and securing land for residential use – the construction sector can be unlocked, enabling a faster increase in affordable housing supply.
At the same time, these measures will boost productivity and economic competitiveness, particularly given that the construction sector, together with its horizontal and vertical linkages to numerous professional fields, constitutes a key pillar of economic activity.
