Cyprus Households Struggle with Affordability Pressures Despite Higher Net Wealth

A recent European Central Bank (ECB) survey has shed light on the financial struggles faced by households in Cyprus. According to the Household Finance and Consumption Survey for 2023, Cyprus households have a higher average net wealth than many euro area counterparts but lower median incomes.

The survey found that the median annual gross income of Cyprus households was €30,900 in 2023, compared with €37,100 for euro area households. Lower-income households, making up the bottom 20% by income, had a median annual gross income of €10,300 and struggled to meet regular expenses, including debt-servicing payments.

Only 9.8% of these lower-income households were assessed as having the ability to save, with a median debt-service-to-income ratio of 56.7%. Middle-income and younger households also faced affordability pressures, with middle-income quintiles having a median gross annual income 20% below the euro area average.

The government has implemented measures to address these issues, including tax reductions and subsidies aimed at making living costs more affordable. Further social security reforms are planned over the next 18 months.