For many reasons, the people of Cyprus have been attached to their properties for centuries and land was traditionally the main, if not the only form of investment.  The supply of land is limited, both in general and for specific uses.  On the other hand, demand for land is steady and increasing, for many reasons. Land is a social status and in older times it served as an investment, guaranteeing social insurance and protection of the owners, who looked at the certainty of capital appreciation, which could be liquidated to meet the requirements of the family against illness, for dowry, or to provide the financial means for educating their children.  The lack of other channels of investment was a decisive factor for the attachment of Cypriots to all kinds of real property.

Coming to the more recent past from 1960 with the establishment of the Republic of Cyprus to date, the trends of property values have been always upwards, with certain periods of leveling off, but with no downward movements.  Even after the Turkish invasion of 1974, during 1975-1977, when demand for land dropped sharply, there were no decreases in values, for the mere reason that there was a simultaneous sharp decrease in supply.  Even those who abandoned the country in search of employment elsewhere were not prepared to part with their property if “it did not fetch its value”. 

After the re-activation of the economy from 1978 and the increasing pressure on the available land resources by the competing land uses in the decade of 1980, the property market of Cyprus witnessed a series of unprecedented increases in land values, with a fierce speculation and with investors doubling their money in a few years. 

In 1980 Capital Gains Tax was initially introduced, but its effect was not felt until early 1990’s.  This legislation, together with the implementation of the Town and Country Planning Law as from 1.12.90 under which stringent planning control measures were imposed, set a check to the uncontrolled  increases in property values, which, though, continued to rise, but at a more reasonable and rational pace.  

The Cyprus Stock Exchange officially established in 1996, came to its boom during 1999-2000.  During this period there was a massive turn to investing in shares almost by everybody.  But even then, Cypriots did not sell their properties to invest in the Stock Exchange, but preferred to get a loan by mortgaging their properties.

During this period there was a sharp increase of demand for commercial accommodation, mainly offices of high standard and specifications, and demand by the newly created Public Companies, anxious to secure privileged plots, both touristic and commercial.

After the bursting of the bubble of the Stock Exchange and the general disappointment, the mass of investors lost their confidence and returned to property, the traditional channel of investment.  This trend was coupled by the lowering of interest rates and the creation of various lending schemes by Banks, Insurance Companies and other financial institutions with payment facilities, which increased demand for housing and business accommodation.  The euphoria which followed the forthcoming accession of Cyprus to the European Union and the prospect of a possible solution of the political problem, contributed to further increases in the demand from locals.

At the same time, demand from foreigners also showed a substantial increase for similar reasons.  The advantages of Cyprus, a crossroad among three continents, at short distances from Europe, Africa and the Middle East, its excellent communication and telecommunication network, standard of facilities and services offered, its mild climate, pleasant environment with sunshine and sandy beaches, its cultural heritage, are known worldwide.  The forthcoming accession of Cyprus to the European Union and the expectation of the solution of the political problem, urged more foreigners to get interested in investing in the property market of Cyprus, having also in mind existing property values which though rising, are still lower than those in other tourist destinations or in their home countries.

Particularly, people from the U.K are under the feeling of security living in Cyprus, where everybody almost speaks their language, in proximity with the British Sovereign Base Areas.  A large number of such people decide to sell their houses in the U.K, prevailing high prices and buy a house or villa in Cyprus at a lower price.

The Russian market is also developing satisfactorily with particular interest in luxury houses.

After the introduction of Cyprus in the European Union and the general euphoria of the worldwide economy, Cyprus faced a booming in the property market that has never seen before. Property values took-off approaching a 50-100% increase during 2007-2008. Unfortunately this booming was followed by a serious recession in the property market and the economy in general, dropping the values in the property market for the first time in the history of Cyprus.