INVESTMENTS in the property sector are low and despite the significant decrease in mortgage rates, they remain well above the Eurozone average reports Ernst & Young Cyprus Ltd (EY) in its second edition of its Real Estate Dynamics Report, which provides a comprehensive analysis of recent developments in the island’s property sector.
Ernst & Young reports that while the number of contracts deposited at Land Registry offices and property transactions increased 7% and 2.9% respectively during the first half of 2015, the contribution of the construction and real estate sectors to the island’s Gross Domestic Product (GDP) continued to decline during the first quarter of 2015, albeit at a slower rate.
After fourteen consecutive quarters of economic recession, the island’s GDP grew 0.2% in the first quarter of 2015, but at the same time, investments in the construction sector remained low (€306.1 million or 7.1% of GDP) compared to the previous year.
The report notes that the parliament agreed foreclosure legislation in May, paving the way for Cyprus to take part in the European Central Bank’s quantitative easing program and that parliament passed a series of laws relating to property taxation on 9th July “aiming to stimulate activity and growth in the property and construction sector”.
The report emphasizes that dealing with the high-level of non-performing loans (NPLs) is the most significant challenge faced by Cypriot banks. Restoring the financial health of the banking sector is key step in the economic recovery of the island.
Real Estate Dynamics – Issue 2 Ernst & Young Cyprus Ltd.