- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Government needs to take urgent action

SPEAKING to the Overseas Property Professional (OPP), Harris Samaras, the chairman and chief executive of local research company Pytheas, said “a major factor in turning the amazing potential that the island has into achievement in the overseas property market is the ability of the Cyprus Government to develop, introduce and enforce effective legislation to deal with the many problems in the country’s real estate, banking and legal sectors.

Samaras called on the island’s politicians to be much more pro-active and for “Cyprus to act forcefully, with a greater sense of urgency to reverse its high fiscal deficits, to safeguard public financing and to increase the scope for private sector growth.

He argues that even though the Cypriot banking sector is basically sound, “the real estate market is a significant component of the banks’ loan books and represents the majority of loan collaterals (more than 40%).” The situation worries him and “the low overall profitability contribution to Cypriot banks from Greece and the elevated loan provisions that subsequently need to be undertaken will affect the funding ability of banks to real estate related clients for at least the next 12 months.

The lending community on the island needs to be much more competitive says Samaras. “Where some other countries have lowered their mortgage interest rates and property taxes to encourage overseas investors, mortgage interest rates in Cyprus are amongst the highest in Europe and the government is talking about increasing property taxes it charges large land owners; a charge that will no doubt be passed on to those buying property. This approach is a recipe for disaster, especially when competition (governments in other countries) has taken steps to reduce the costs associated with property ownership to encourage investment.

Samaras is worried about longer term trends too. “Cyprus enjoyed a more than ten-year housing boom until 2008” he says, “and then the market began to fall in certain areas, mainly because of:

Government needs to take urgent action