A growing trend of treating housing primarily as a financial asset rather than as shelter is fueling a rental crisis in Cyprus and Greece, leading to soaring rents, deteriorating properties, and significant housing stress for local populations. This “financialization” of real estate, driven by an influx of foreign capital and the explosive growth of short-term rental platforms, has created a market of misaligned incentives that penalizes long-term tenants.
The Situation on the Ground: Key Statistics
Data from various sources paints a stark picture of the escalating housing problem in both nations.
In Greece, the number of households renting their home has jumped from 25% to 35% over the past decade. A surge in short-term rental listings—from under 20,000 in 2015 to over 145,000 in 2024—has been directly linked to a more than 30% increase in long-term rents since 2018. As a result, one in six Greek renters now spends at least half their income on housing.
In Cyprus, the situation is similar. Rents in Nicosia climbed by 48% between 2016 and 2024, while rents in some districts of Limassol have doubled. Annual rent growth continues to outpace wage increases, squeezing household budgets.
Driving Forces: Foreign Investment and Short-Term Lets
The shift in the housing market is being propelled by two main factors. Firstly, a significant inflow of foreign capital is treating property primarily as a store of wealth. Since 2013, Greece’s Golden Visa scheme has attracted over €4.3 billion, mostly into real estate. In Cyprus, more than 53,000 properties were purchased by non-EU nationals between 2015 and 2025.
Secondly, the explosion of short-term rental platforms has diverted a substantial portion of the housing stock away from the long-term market. Landlords are financially incentivized to cater to the lucrative tourist market, where a property can generate nearly double the monthly income of a conventional lease.
The Consequences and Long-Term Risks
This dynamic creates what analysts call “broken incentives.” Landlords have little reason to invest in the maintenance and upkeep of long-term rental properties, as high demand ensures they will be occupied regardless of their condition. Tenants, typically on short-term contracts, have no motivation to invest in a property they do not own.
The long-term risk is the creation of a two-tiered housing market: a premium, well-maintained stock for investors and tourists, and a decaying, increasingly unaffordable stock for local residents. Analysts suggest that policy solutions—such as the mandatory registration of short-term rentals, tax incentives for property maintenance, and stronger tenant protections—are needed to address the growing imbalance.
Source: Cyprus Mail