In today's economy, with interest rates held high to restrain inflation, construction cost is perhaps the single biggest factor in housing — and in the anxieties of young people. Assume rates stay where they are or fall over the next 24 months without returning to pre-war levels; we still need to examine construction cost itself.
In an unstable environment — wars, pandemics, natural disasters, financial crises — with rates at levels few predicted, states must find the mechanisms, the levers, that make price changes less easy and certainly more controllable.
Why the construction industry deserves protection
We often hear about the household basket, or the hundred basic products and how their prices move, to gauge inflation and the purchasing power of salaried workers. The current government's proposal for a price-comparison platform aims at a healthier competitive environment that could push prices down further.
In our state and our economy, the construction industry — especially after 1974 and above all after the 2008–2013 crisis — has been the pillar that brought us to the standard of living we enjoy today. Recognising its importance, and the character of our people (ownership, not tenancy), we should be especially careful with our policies and should design new ones that protect our product.
Six measures the state could take
1. Publish monthly prices for basic construction materials — steel, bricks, aluminium, concrete and others — so that anyone building or buying a home can negotiate from a known baseline.
2. Have ETEK, as the competent body, publish the average construction rate per month for different building categories, so profiteering situations are avoided.
3. Allow the Ministry of Finance to support manufacturers of certain basic materials, such as bricks — non-monopolistically, across several companies — with fiscal and tax incentives, while monitoring selling prices.
4. Subsidise programmes (mainly EU-funded) for the purchase of new machinery — industrial equipment, vehicles, mixers, tractors — to cut emissions and consumption and bring down the cost of many materials.
5. Encourage new businesses to enter the Cypriot market, for example in electricity supply, so that genuine competitive conditions are created.
6. Finally, and critically: create or import labour in a targeted way to reduce construction cost on the labour side. As things stand, every contractor is full of work with short staffing, and prices are pushed up on the logic of "I can't keep up — but if I take it, it had better be worth it."
The state as facilitator, not spectator
These are only some of the things that could be done, and we certainly have the specialists and experts who could build a model of control on one hand and encouragement on the other, to support our industry.
If we leave everything to the market alone in an industry like construction, the results will be very negative for everyone: an expensive, long and painful industry for most, reduced competition, and monopolistic regimes that exploit the moment and people's needs.
The state as facilitator, supervising adviser and setter of goals can bring serious change — not only for small and medium enterprises, but for a healthier economy tomorrow, with a steady contribution to the country's GDP.
Frequently asked questions
- What drives building costs in Cyprus?
- Material prices, skilled-labour availability, the energy performance specification, site conditions and the time taken to obtain permits and connections.
- Are there state incentives for a first home?
- Cyprus operates support measures including a reduced VAT rate for a qualifying first primary residence within defined area and value limits. Conditions change, so confirm current eligibility with your lawyer.
- Is it cheaper to build than to buy?
- Self-building can be cheaper per square metre but transfers risk, financing complexity and programme management to you. Buying from a developer prices that risk in.
