Despite record construction activity and major investment in residential real estate, housing rents in Europe continue to rise — and Cyprus is no exception. New Eurostat data point to a paradoxical situation: more is being built, more is being invested, more permits are being issued, yet pressure on the rental market is not easing. This means the core problem lies not so much in a shortage of housing, but in the structure and direction of supply, especially in countries with active development such as Cyprus.
What the Eurostat figures actually say
According to the Housing in Europe – 2025 report, Cypriot households spend on average 11% of their disposable income on housing. This is one of the lowest figures in the European Union and noticeably below the EU average of 19%. At first glance, such numbers can give the impression of a relatively comfortable situation.
In addition, Cyprus shows an extremely low housing overcrowding rate — just 2%, which is also often interpreted as a sign of an adequate housing stock. However, behind these positive indicators lies a less obvious but critically important market feature. According to Eurostat, 70% of residential properties in Cyprus are considered underused. This is the highest figure in the European Union. In practice, a significant share of existing housing does not serve the long-term rental market and does not meet the current needs of permanent residents.
Why construction growth does not reduce rents
Across Europe, construction activity remains high. Between 2010 and 2024, the number of housing construction permits increased by 5%, and investment in the sector reached 5.3% of EU GDP. Cyprus stands out even against this backdrop: investment in residential real estate on the island reaches 8% of GDP, underscoring the role of property as a key driver of the economy.
Nevertheless, over the same period, EU rents rose by 25%, while house prices increased by 53%. This gap clearly shows that construction growth in itself does not mean an increase in the supply of affordable housing for long-term rent. In Cyprus, this is felt especially sharply in major cities and tourist regions, where demand from locals, expats, and service-sector workers collides with limited choice.
Where new housing in Cyprus is going
In practice, a significant share of new development is targeted at segments that have little impact on the Cyprus long-term rental market. These are villas and country houses for seasonal living, properties intended primarily for sale, investment real estate held for capital-value growth, and housing for short-term rent. The last factor is especially relevant for Cyprus as a tourist destination, where short-term rentals increase the total number of units but at the same time reduce housing availability for permanent residents.
As a result, even with active construction, the actual supply of apartments and houses for long-term rent remains limited, which supports further price growth.
Build to Rent and a possible path for Cyprus
Against this backdrop, the Build to Rent model is attracting increasing attention, where residential projects are created from the outset exclusively for long-term renting and are managed professionally. In countries such as Germany, Austria, Denmark, and the United Kingdom, this approach has helped form a more stable and transparent rental market.
Germany is a telling example: 53% of the population lives in rented housing, and the long-term rental market itself is institutionally developed and less prone to sharp fluctuations. For Cyprus, where the share of homeowners is traditionally high, such a model could become a tool for balancing supply and demand, especially in urban centers and areas with a high concentration of jobs.
The social dimension of the housing crisis
Eurostat data emphasize that the housing issue goes far beyond the real estate market. Almost 9% of European Union residents cannot ensure adequate heating for their home, and about 6% have faced discrimination when searching for housing. Particularly vulnerable are people at risk of poverty: they are twice as likely to face refusals and unequal treatment.
For Cyprus, this has direct relevance, since housing affordability affects labor mobility, the inflow of specialists, social stability, and the long-term sustainability of economic growth. Against the backdrop of a gradual decline in homeownership rates in Europe, the quality and predictability of long-term renting become key factors for young professionals, families, and workers who need flexibility without losing security.
What the core problem is for Cyprus
Cyprus’s housing challenge is linked not so much to the volume of construction, but to how new housing is integrated into the market. Without structural changes in the composition of supply, pressure on rents will persist, regardless of the number of new projects.
At the center should not be the question of whether Cyprus needs more housing. The key question is which housing formats can meet the real needs of people who live and work on the island and ensure a sustainable balance between investment, tourism, and housing affordability for society.