Globally we are seeing the changes impacting the international housing market and Cyprus. Demographics and social changes are evidently pushing toward the evolvements in the market.
In the United States, large corporations and high-net-worth individuals who acquire houses and apartments to resell or rent to third parties account for 20% of all property buyers. This trend has been increasing for the past two years, as people with the requisite financial means purchase homes with the intention of renting them back to their prior owners or reselling them to find a tenant.
As financial crises become more common, an increasing number of people consider selling their homes as a way to produce income to pay off their debts. At the same time, Generation Y (born in the 1980s and 1990s) has demonstrated a preference for renting rather than owning residences closer to the city centres with more convenient amenities.
The concept of owning a home is still appealing to many individuals in Cyprus. However, like most European countries, we predict that the local market will eventually follow a similar path to that of the US.
According to a recent WiRE FS research of transactions in Nicosia, apartments accounted for 40 percent of the transaction value, with two-thirds of these sales taking place in urban areas. This reflects a growing trend among Cypriots, particularly the younger generation, to purchase apartments rather than houses (because they are cheaper, smaller, and closer to amenities), with many acquisitions coming from investors looking to generate rental income by capitalising on the growing demand for rentals.
Taking it a step further and looking at Eurostat data, it is clear that owning a home is losing its attractiveness. Property owners made up 74.1 percent of the Cypriot market in 2009, 73 percent in 2013, and 67.9 percent in 2019 (the most recent data available). In fact, 2019 was the first year in which Cyprus's percentage of property owners went below the EU 27 average (69.8 percent).
People's housing demands will certainly alter when the country's demographics evolve (fewer births, smaller families) and societal standards shift.
Nowadays, most people don't want to go for the big house with a front lawn and a swimming pool. They want a smaller, functional unit, close to amenities and with low running costs, as they expect to spend a significant amount of their time going out for coffee/dinner and traveling. Besides, the number of people who can afford these properties has significantly decreased compared to thirty years ago.
The population and households in Cyprus have expanded dramatically over the last thirty years (from 185,459 households in 1992 to 303,242 households in 2011), resulting in significant changes in the supply of residential property. However, since the Cypriot population has steadily aged and family size has declined over the past two decades, the primary growth in supply has been to cater to overseas buyers rather than locals.
The design of the housing units under construction has also changed. In the 2001 census, properties with up to five rooms (including the kitchen and living room) accounted for 52 percent of the total, but by 2011 that number had risen to 61 percent. Houses with three and four rooms saw the greatest percentage growth during that time period (18 percent and 23 percent, respectively); this is in accordance with how households have altered over time, with family sizes shrinking and young Cypriots having 1-2 children on average.
The property market will keep accelerating in the direction that the demographics shift, and it will make a significant impact on the future of the market.
While these shifts are happening, we are seeing great changes in the future of real estate. Should you be unsure about your situation or require any personal advice, our team is happy to provide you with guided expert advice. Contact our team at 77000111.