Only 1.8 per cent of Limassol apartments fit average household budget, Ask Wire study finds

Limassol, Cyprus. Only 1.8 per cent of the two- and three-bedroom apartments listed for sale in Limassol are priced within the estimated €256,000 budget of a hypothetical average-income household, according to a new study by real estate analytics firm Ask Wire. The research points to wide differences in housing affordability between districts.

Scope and method

The analysis draws on residential property listings from across the government-controlled areas of Cyprus. It found that Nicosia offers the widest choice of apartments within the budget assumed in the study.

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Ask Wire compared asking prices advertised on the online marketplace Bazaraki in early October with household purchasing power, which it calculated from median salary data published by the Cyprus Statistical Service. After data validation checks, the firm examined 25,550 active listings, of which 17,532 were for two- or three-bedroom homes.

Barriers to homeownership

The study identifies two main obstacles for buyers. One is the ability to raise the initial deposit that a mortgage requires, and the other is the capacity to meet the monthly repayments.

The benchmark household

As a benchmark, the company modelled a household of two working adults and two dependent children, with each adult earning the estimated median salary. It assumed the household had no other outstanding loans and could obtain a mortgage at an interest rate of 3.24 per cent over 25 years.

On those terms, the household’s combined gross monthly income would be about €4,503, and its net income would be €3,988. Allocating 25 per cent of net monthly income to the mortgage would allow an instalment of around €997 and the purchase of a property costing up to €255,995.

Such a purchase would require an initial equity contribution of €51,199, equal to a 20 per cent deposit, before additional property purchase expenses.

Assumptions and limits

Ask Wire stressed that the 25 per cent repayment threshold was an assumption made for the analysis. It said the figure is not a limit set by the Central Bank of Cyprus and does not guarantee that a bank would approve a mortgage.