Nicosia, Cyprus. Developers in Cyprus have increased pressure on the government to relax planning rules by reducing minimum apartment sizes and removing mandatory parking requirements per unit, arguing the changes would lower construction costs and improve affordability.
Developers’ proposals and affordability claims
In recent months, developers have advocated for smaller homes and fewer parking spaces, presenting the changes as a way to reduce costs and make housing more affordable. The central question is whether such measures would translate into lower prices for buyers.
International experience cited from Canada
Canada is cited as an example of what can follow similar policy shifts. Over the past 15 years, cities such as Toronto and Vancouver reduced minimum unit sizes and relaxed parking requirements to accelerate housing delivery. Average new apartments became 15–25% smaller, with one-bedroom units commonly delivered at 38–45 square metres compared with previous sizes of 50–55 square metres, and two-bedroom units also shrinking.
Price outcomes and distribution of savings
The article states that prices did not fall in those cases. In many instances, absolute selling prices remained broadly unchanged while prices per square metre increased sharply. While reduced parking requirements produced savings estimated at €25,000–€60,000 per space, the article says these were not passed on to buyers and instead were capitalised into land prices and developer margins.
Market cycle effects and shifting demand
The article links outcomes to the pandemic-era cycle of ultra-low interest rates, which pushed investors into residential property and supported expectations of rising prices. Developers are described as responding by maximising unit counts and yield, with small units selling readily. When interest rates later rose to address inflation and supply caught up with investor demand, oversupply became more apparent, particularly in small investment-driven units, while demand shifted toward longer-term occupiers and households.
Cyprus buyer profile and geopolitical risk
The article says buyers of new apartments in Cyprus are predominantly investors, foreign purchasers, and second-home buyers, particularly in coastal cities, and that these buyers focus on location, yield, and exit liquidity rather than size. It argues that, under these conditions, smaller units would reduce space without reducing prices. It also identifies geopolitics as an additional risk for Cyprus, stating that external shocks, regional instability, and changes in migration or capital flows could quickly alter demand and leave an oversupply of small units that are ill-suited to local households if investor demand weakens.
Parking, liveability, and broader policy approach
The article argues that removing parking requirements in a car-dependent country would shift congestion and costs to streets and municipalities, and that shrinking homes would increase density without improving liveability. It concludes that affordability cannot be addressed through technical deregulation alone and calls for structural supply measures, infrastructure-led planning, diversified housing tenures, and mechanisms to ensure any cost savings reach end buyers rather than being absorbed upstream.
Do you think planning deregulation in Cyprus would lower home prices or mainly change what is built?