THE Central Bank of Cyprus has estimated that the price of housing property will fall by 4% in 2010, following a fall of 8% in 2009. Its estimate is based on property valuations and other figures in April 2010.
According to the Central Bank’s June economic bulletin, activity in the domestic property sector during the first four moths of the year appeared to be stabilising, although the general climate is restrained.
The interest being shown by both Cypriots and non-Cypriots in purchasing housing is still low.
The bulletin also considered that the increased annual growth rate of housing loans during the first quarter of 2010 may be contributing, to an extent, to a slowing down of the downward trend in the demand for housing.
Once again, the Central Bank referred to the risks to banks in the sector from their possible exposure, stressing that. “The risks will be larger if the slump in property prices is higher than expected”.
Adding that “The risks for the financial stability may focus on the impacts of a possible larger-than-expected correction of housing prices as well as the further weakening of the domestic economic activity that is related to the sector of housing properties”.
However, the Central Bank does not foresee a sharp fall in property prices: “Although a sharp drop in house prices, which would lead to a decline in the net value of households, could maximize the risks for financial stability, the possibility of such occurrence in the short term remains low”, it said.
In addition to the risks resulting from the fall in property prices, the Central Bank also referred to further risks associated with household revenues due to unemployment levels.
Talk about burying their heads in the sand! Cyprus property prices will crash just like they have in Spain and Portugal.
There is a huge discrepancy between supply and demand in the property market at the moment. Foreign buyers are very thin on the ground partly due to the ongoing issue of Title Deeds, but also due to adverse economic conditions in their own countries.
The Cyprus property boom is well and truly over and the sooner developers/banks etc. realise this the better!
Just as in the UK, housing prices are over-inflated and in need of sharp correction.
Title problem adds to the nervous market, and the introduction of revised valuations will just be another nail in the coffin – or should that be coffers!
If the government continues to refuse implementation of a meaningful change in the title deeds system, the property market in Cyprus will bring the financial system to crisis point.
I am watching events closely & will transfer funds out of the country if things get worse.