The final quarter of 2024 brought sobering news for the Cyprus property market, particularly for the owners of homes in financial distress.
Primary residences sold at auction by lenders fetched 27% less than their market value on average, highlighting ongoing pressure in the real estate sector, especially in distressed sales.
Primary homes sold below market value
According to data from the Central Bank of Cyprus, six primary residences were sold during two rounds of foreclosure auctions between October and December 2024. Although their combined market value stood at €1.2 million, they were ultimately sold for €878,000 — a stark 26.7% below valuation.
Four of the properties had individual market values under €350,000, while the remaining two were worth significantly more. In the first round, four homes were sold for a total of €357,000, despite being valued at €381,000. In the second round, two homes valued at €805,000 were sold for just €521,000 — an average of €260,000 per property.
By comparison, during Q3 of 2024, five primary homes were sold at auction for a combined €862,000, down from their market value of €1.2 million.
Legal framework for auctions in Cyprus
Cyprus legislation allows auction sales of foreclosed properties to start at a minimum reserve price of 80% of the property’s market value. If the property remains unsold after a year, that threshold can drop to 50%.
This framework is intended to balance market efficiency with borrower protection — but in practice, many homes are being sold at steep discounts.
Borrowers not using new protections
Despite enhanced legal tools introduced in 2023 — including greater powers for the Financial Ombudsman — many borrowers have yet to engage with the process to prevent foreclosures.
Borrowers with an original loan up to €350,000 and property worth the same may now apply to the Ombudsman to appoint a mediator, aiming to resolve disputes with lenders before the property goes to auction.
Even those with terminated loans or business premises (up to €750,000 in value) can seek out-of-court mediation. Yet, usage of this mechanism remains low, suggesting either a lack of awareness or reluctance to engage.
530 homes notified for auction
During the same quarter, 530 foreclosure letters were sent to borrowers, informing them their primary residence was at risk of auction. Of these, 495 homes were valued under €350,000 and 35 were above that figure.
Additionally, 282 formal notices (known as Type IA) were issued, setting the auction date. Some 235 of these concerned properties worth less than €350,000, and 47 were worth more.
After unsuccessful initial auctions, three properties were sold to third parties, while 27 others were acquired by lenders six months post-auction.
Foreclosure activity on the rise
In total, 239 mortgaged properties (including homes, land, and commercial assets) were foreclosed in Cyprus by the end of 2024 — up from 186 in the previous quarter. However, the total value of properties sold declined from €32.6 million to €22.9 million, indicating that lower-value assets are dominating current auctions.
Here’s a breakdown of what sold:
- 45 unfinished homes/flats worth €7.5 million
- 18 commercial properties (shops, offices, factories) worth €1.8 million
- 12 plots worth €1.9 million
- 117 agricultural fields/land parcels totalling €3.4 million
A further 41 properties were sold in the second round, including:
- 10 homes worth €1.7 million
- 7 commercial assets at €2.3 million
- 3 plots of land worth €781,000
- 17 rural/agricultural lots at €1.7 million
What it means for homeowners in Cyprus
While Cyprus continues to attract interest from local and foreign property buyers, the data paints a sobering picture for those in financial distress. Primary homes are being sold well below value, and while legal protections exist, they’re underused.
If you’re a homeowner in Cyprus — or considering entering the market — it’s crucial to stay informed about the legal landscape, foreclosure trends, and your rights as a borrower.
(Translated and summarised from an article published in Phileleftheros 30 April 2025)
