The housing shortage in Cyprus is estimated at 39,000 units. New construction and government affordable housing programmes could increase supply, but labour shortages and strong demand remain the main challenges.
House prices in Cyprus increased by 28%
According to the EU 2026 CY Housing Annex, house prices in Cyprus increased by 28% between 2020 and 2025 — roughly in line with the EU average. Several factors contributed to the increase:
- strong demand from buyers who are not residents of Cyprus;
- investment in real estate;
- higher construction costs;
- growing demand for housing.
The number of property transactions has more than doubled since 2020. Price growth has been particularly noticeable in coastal cities. In Limassol, Paphos and Larnaca, housing costs are around 39% higher than the national average. Tourism, foreign business and the popularity of short-term rentals are putting additional pressure on the market.
Rental costs are rising even faster. In 2025, rent accounted for an average of 22% of household income in Cyprus — the same as the EU average. For households at risk of poverty, the figure reached 28.3%.
The government plans to build affordable housing
In December 2025, the Cyprus government announced plans to build 500 affordable homes in Nicosia, Limassol, Larnaca and Paphos. The programme is estimated to cost €70 million. A broader housing strategy provides for the creation of more than 1,900 units, almost 200 of which will be designated as affordable housing. The strategy also includes:
- affordable rental projects;
- grants for young people buying homes;
- support for the construction of student housing.
The impact of these programmes will depend on how quickly the new homes are delivered and whether lower-income residents can afford them.
The construction sector lacks workers
Cyprus’s construction sector continues to grow. In 2024, investment in housing reached around 8% of GDP — the highest share among EU countries. Building permit data also point to a further increase in supply. However, the sector’s development is being constrained by labour shortages. In October 2025, 41.4% of construction companies in Cyprus said that a lack of workers could limit output. For comparison, the EU average was 27.5%. Productivity in Cyprus’s construction sector also remained relatively low — at around 67% of the EU level.
Short-term rentals and housing quality
The number of registered short-term rental properties almost doubled between 2023 and 2026. More than 9,000 registered properties offered nearly 40,000 beds. However, the authorities believe the actual number of such properties is higher. In mid-2024, it was reported that more than 7,000 of 14,446 short-term rental properties were unregistered.
Housing quality also remains a problem. In 2023, 32.1% of Cyprus residents lived in homes affected by leaks, damp or rot. The EU average was 15.5%. At the same time, the share of social rental housing in Cyprus is close to 0% of the housing stock, compared with an EU average of 8%. Cyprus is therefore actively increasing construction and launching affordable housing programmes. However, with the current shortage, the main question is how quickly new homes will reach the market and whether they will be affordable for residents who need safe and stable housing.