Cyprus economists link housing crisis to foreign investment policies

Economists from the University of Cyprus have identified current government policies linking foreign investment and residency to property purchases as the primary driver of the nation's housing crisis. In interviews with Economy Today, Sofronis Clerides, Dean of the School of Economics and Management, and Andros Kourtellos, chair of the Department of Economics, argued that the influx of high-income foreign residents has significantly distorted the market.

Clerides clarified that the current situation is not a credit-fueled bubble akin to the 2008 financial crisis, but rather a supply-demand imbalance exacerbated by government incentives that favor luxury housing over affordable homes. He warned that the country's capacity to absorb new residents is finite and requires a strategic shift in how foreign investment is attracted.

Kourtellos recommended decoupling permanent residency from real estate acquisitions to move away from unproductive capital. He proposed that investment incentives should instead pivot toward sectors like technology, research, and job-creating business activities that provide long-term economic benefits rather than merely inflating property values.