It’s the million-dollar question: Is it better to buy or to rent a home? The fact is, from country to country, generation to generation, year to year, and from person to person, the answer varies, depending on market conditions and personal circumstances. All we can do at any given moment is examine a buyer’s circumstances and expectations on the one hand, and the current market prices, on the other hand, to determine what works best in each individual case.
Looking at Cyprus, today, observations and statistics reveal that foreigners prefer to buy, while local residents are more likely to rent a home. Take a closer look at the market, and the explanation is obvious. According to official statistics, a 12,8% rise in property sales to foreign buyers has already been recorded for the first 10 months of 2018, compared with the respective period in 2017. The main reason for the rise is the ‘Cyprus Investment Program’, which allows investors in Cyprus real estate to apply for citizenship in Cyprus – an EU country, subject to a series of requirements, strict background checks, and due diligence procedures.
By contrast, Cypriots are finding it difficult to get their hands on the necessary capital to buy a home, given the local lenders’ new and more stringent collateral requirements. For the time being, rentals are often their only option, especially in the case of young adults who decide to leave their parental home. In such cases, two-bedroom apartments are the preferred rental property type, often seen as the first step towards independence, in the hope that they will one day be able to buy a bigger, more permanent home.
It is expected that due to the recent growth in Cyprus and the stability of the banking system it will become easier for younger people to require a loan to purchase their own property and in return, the prices of property, due to high demand will increase.
Foreign buyers, on the other hand, have viewed Cyprus as a destination to purchase property for some time. Cyprus attracts buyers from many countries even nearby countries such as Lebanon, Egypt, and Lybia, but, the majority of buyers originate from EU countries such as the UK, Greece, Ireland, Germany, Sweden and others. With individuals looking to relocate permanently, invest in a holiday home or retire in the sun. The value of such properties is usually less than half a million.
In recent years Cyprus has launched a program that has attracted high net worth individuals that meet the requirements of the Cyprus Investment Program. They scan the market for high-end residential properties, mainly in the coastal resorts or just outside them but close to the beach.
After several years of stagnation and declining prices in the property market, the Land and Property Developers Association has recently confirmed that the market has stabilized and property prices are slowly but surely rising again. For foreigners as well as local buyers with the necessary resources, this is the perfect time to step in and buy, before demand pushes prices higher, faster.