In the last quarter of 2024, troubling news emerged for the Cypriot real estate market, particularly impacting owners of financially struggling homes.

Auctions of primary residences conducted by lenders resulted in sales that were, on average, 27% below the properties’ market value, emphasizing persistent difficulties in the real estate sector, particularly regarding distressed properties.

Primary homes sold at below market rates

According to the Central Bank of Cyprus, six primary residences changed hands during foreclosure auctions held between October and December 2024. Although these properties were collectively valued at €1.2 million, they sold for just €878,000, falling 26.7% short of their assessed value.

Four of these assets had individual market valuations of less than €350,000, while the other two were valued more substantially. In the initial round of auctions, four homes sold for a total of €357,000 against a market valuation of €381,000. In the subsequent round, two properties worth €805,000 were sold for only €521,000 — averaging €260,000 per home.

During the previous quarter, five primary residences were auctioned for a combined total of €862,000, noticeably below their €1.2 million market value.

Cyprus auction legislative framework

The legal framework in Cyprus permits the auctioning of foreclosed properties to commence at a minimum reserve price equating to 80% of the market value. Should a property remain unsold after a year, this threshold can be lowered to 50%.

This structure is designed to strike a balance between efficient market operations and borrower protection. However, in practice, numerous homes are being traded at significantly reduced prices.

Limited use of new borrower protections

Despite the implementation of refined legal tools in 2023 — which includes enhanced Financial Ombudsman authority — many borrowers have yet to leverage these options to prevent property foreclosures.

Homeowners with an original loan of up to €350,000 may now petition the Ombudsman to appoint a mediator in an effort to negotiate with lenders before their property is auctioned. Even those with ceased loans or business properties valued up to €750,000 can pursue non-judicial mediation. The low engagement with these mechanisms suggests a lack of awareness or reluctance to participate.

530 homes slated for auction

In the same period, 530 foreclosure notifications were dispatched to borrowers, warning them that their primary homes were at risk of auction. Of these, 495 homes were valued below €350,000, while 35 exceeded this threshold.

Moreover, 282 official notices (Type IA) were issued, confirming auction dates, with 235 concerning properties valued under €350,000, and 47 worth more.

Following initial unsuccessful auctions, three properties were bought by third parties, and 27 others were repossessed by lenders six months later.

Increasing foreclosure activity

By the end of 2024, a total of 239 mortgaged properties — including residential, land, and commercial assets — were foreclosed in Cyprus, up from 186 in the previous quarter. However, the total value of sold properties decreased from €32.6 million to €22.9 million, indicating a trend toward auctioning lower-value assets.

Noteworthy sales included:

– 45 unfinished homes/flats totaling €7.5 million
– 18 commercial properties (shops, offices, factories) worth €1.8 million
– 12 plots equal to €1.9 million
– 117 agricultural fields/land parcels amounting to €3.4 million

An additional 41 properties were sold in a second-round auction, featuring:

– 10 homes valued at €1.7 million
– 7 commercial assets at €2.3 million
– 3 plots totaling €781,000
– 17 rural/agricultural lots at €1.7 million

Implications for homeowners in Cyprus

While Cyprus continues to attract interest from domestic and international property buyers, the current data presents a challenging scenario for those facing financial hardship. Primary homes are being sold significantly below their assessed values, and while legal protections are available, they remain underutilized.

For homeowners in Cyprus — or those considering entering the market — staying informed about the legal frameworks, foreclosure patterns, and your rights as a borrower is crucial.