Cyprus’ property market is facing a growing imbalance between what developers are building and what local buyers can afford, with Ask Wire founder and CEO Pavlos Loizou warning that a surge in building permits could put pressure on the market from 2027 and 2028.
Speaking on the latest episode of Property Talk by Bazaraki, Loizou said the continued construction of residential developments, particularly in coastal cities, does not necessarily mean that Cyprus is producing the homes its own residents need.
Instead, developers are increasingly targeting foreign buyers with greater purchasing power, while higher construction costs and relatively modest wage growth are making homeownership increasingly difficult for many Cypriots.
For Loizou, the apparent contradiction between rising residential construction and worsening affordability is not difficult to explain.
“Both can be true at the same time,” he said, referring to the growing number of developments and the inability of local buyers to afford them.
The distinction, he explained, lies in who the properties are being built for and whether demand from those buyers can be sustained.
While he sees little evidence of oversupply in housing aimed at local buyers, he is considerably more concerned about the growing pipeline of developments targeting foreign purchasers.
“If the question is whether too many homes are being built exclusively for foreigners, and whether there will be oversupply in that segment if they stop coming, then yes,” he said.
He explained that foreign demand has been supported by Cyprus’ tax environment, the relocation of international businesses and geopolitical developments, particularly in the eastern Mediterranean.
However, these sources of demand cannot be assumed to continue indefinitely.
Indeed, Loizou identified the volume of building permits issued in recent years as one of the clearest warning signs for the market.
According to a September analysis by Ask Wire, permits covering 8,978 residential units were issued between January and May 2026, compared with 5,484 during the same period of 2025, an increase of 63.7 per cent.
Larnaca recorded a particularly sharp rise, with permitted units increasing from 953 to 2,342, while Limassol and Nicosia also experienced substantial growth.
The concern is not simply how many properties receive approval, but when those developments eventually reach the market.
Loizou explained that projects permitted in earlier years are already progressing towards completion, while the latest wave of approvals could bring considerably more housing onto the market in 2027 and 2028.
Whether that additional supply can be absorbed will depend heavily on the continued arrival of foreign purchasers.
Nevertheless, he stressed that the market has not yet experienced a general collapse in demand.
According to figures he presented during the discussion, apartment transactions increased significantly during the first quarter of 2026 compared with the corresponding period of 2025.
He cited an 18 per cent increase in sales of apartments priced below €200,000, a 36 per cent rise in the €200,000 to €400,000 category, and a 41 per cent increase in transactions involving apartments priced between €400,000 and €1 million.
However, he said activity weakened during the second quarter as geopolitical tensions affected the market.
Moreover, the strength of newly built sales has not been matched by demand for older properties.
New apartments are increasingly driving transactions, while resale properties are losing ground, creating another division within the market.
The wider market has nevertheless continued to expand. According to the latest Land Registry figures, 14,969 property sale contracts were deposited during the first nine months of 2026, up 13.6 per cent from 13,173 a year earlier.
However, rising sales are not necessarily translating into better opportunities for local households.
Loizou explained that construction materials have become approximately 20 per cent more expensive since 2021, while labour costs have also increased.
Developers, he said, must pass those higher costs on to buyers, making wealthier foreign purchasers a more commercially attractive market.
As a result, developments in coastal areas are frequently designed around smaller apartments, investment properties and homes intended for rental income, rather than the requirements of Cypriot families.
The contrast with Nicosia is particularly revealing.
Unlike Limassol, Paphos and Larnaca, the capital is considerably more dependent on domestic demand, supported by government departments, semi-governmental organisations, banks, universities and related services.
Loizou described Nicosia as “boringly reliable”, reflecting the relative stability of its employment base and housing demand.
However, he also warned that developers based in the capital are increasingly looking towards coastal cities, where foreign purchasers can offer higher returns and potentially quicker transactions.
This could eventually restrict the development of housing specifically aimed at the domestic market.
The affordability problem becomes particularly clear when the cost of buying an apartment is compared with household earnings.
Using the example of a €250,000 apartment, Loizou explained that a buyer could need approximately €50,000 for a 20 per cent deposit, alongside a further €12,500 in VAT, assuming the reduced 5 per cent rate applies to the full purchase price.
That means a potential upfront commitment of €62,500, before other purchasing expenses.
The remaining amount would normally require mortgage financing, leaving borrowers with substantial monthly repayments relative to their income.
Loizou explained that for someone earning approximately €1,700 a month, buying such a property alone would be extremely difficult.
Consequently, younger buyers increasingly depend on two incomes, remain with their parents for longer, build on family-owned land or move further away from city centres in search of cheaper housing.
The discussion also examined whether restrictions on property purchases by foreign nationals would improve the situation.
Loizou questioned how effective such measures could be, particularly when distinguishing between European Union citizens, non-EU nationals and companies established within the bloc.
He also raised concerns about proposed restrictions on purchases near strategically important infrastructure, including ports and other sensitive locations.
His principal concern, however, was not simply that foreigners were buying Cypriot property.
Rather, he questioned whether the proceeds from property sales were being reinvested productively in the economy.
He argued that money generated through land and property transactions often goes towards consumption or additional housing rather than investment capable of supporting future economic growth.
On housing policy, Loizou was equally critical of the reliance on incentives intended to encourage private development.
He argued that such measures can increase land value without resolving the underlying shortage of affordable homes.
Instead, he called for a more substantial role for the state in developing rental accommodation and making better use of existing land.
One proposal involved using publicly owned sites within urban areas to construct homes that would remain available for long-term rental rather than being sold.
He also favoured progressively taxing idle land, discouraging the continued retention of undeveloped plots while infrastructure and permitted building capacity remain unused.
The argument is consistent with an earlier analysis by Ask Wire showing that substantial residential capacity remains undeveloped within existing urban areas, including parts of Nicosia.
Furthermore, Loizou called for an overhaul of the way government departments exchange property-related information.
Asked what his first priorities would be if he were setting housing policy, he identified the integration of databases held by the Land Registry, planning authorities and tax authorities as an essential first step.
He argued that linking these systems would improve transparency, administration and tax compliance while reducing unnecessary bureaucracy.
His second priority would involve restricting the further expansion of development zones and encouraging the use of existing land, supported by measures targeting long-term inactivity.
Third, he proposed the development of purpose-built workers’ accommodation outside major urban centres, addressing the housing requirements of employees who cannot afford conventional rental properties.
Such developments, he argued, could help prevent overcrowding and poor living conditions among lower-paid workers, including foreign employees working in construction and other sectors.
He also warned that housing shortages could eventually undermine Cyprus’ ability to attract and retain international businesses, some of which are already facing difficulties securing suitable accommodation for their staff.
Beyond the property market itself, the discussion turned to the growing importance of data and artificial intelligence in real estate.
Loizou explained that Ask Wire, which operates in Cyprus and Greece, has developed services analysing property transactions, listings, development activity and environmental risks.
Its newer Edge platform tracks development projects, using data from developers, planning processes and property transactions to identify opportunities for banks, contractors, estate agents and suppliers.
According to Loizou, the company has mapped 1,752 development projects since January 2024, adding approximately 60 to 80 projects each month.
He also stressed the importance of distinguishing between AI-generated answers and information supported by reliable underlying data.
For the property market, he argued, an assessment is only as dependable as the evidence used to produce it.
Ultimately, Loizou’s warning was not that Cyprus has already built too many homes.