The property boom in Cyprus is not a bubble, according to a Finance Ministry report which also considers such an eventuality as remote.
However, it does acknowledge that a potential massive sell-off of properties acquired by commercial banks through debt-to-asset swaps, as well as large investment firms acquiring non-performing loans portfolios, could push prices down.
Phileleftheros reported that Finance Minister Harris Georgiades will present on Tuesday the 2019 economic developments and prospects for the period 2020-2022 report to the House Finance Committee.
This also indicates that based on Central Bank of Cyprus figures the development sector as well as Cyprus’ GDP have recovered, however, property prices are moderately rising with the exception of areas affected by specific factors.
“Due to their significant impact on growth, developments in property prices are always closely monitored, especially in view of the fact that price pressures could have a negative impact. To start with, an unsustainable surge in demand can push prices upwards with the risk of a bubble, even though data, so far, has this scenario as being remote,” says the report.
The Ministry also notes that the ongoing property market recovery, as well as the rise in construction activity, are factors helping the boost of banks’ balance sheets. Because they are increasing the total value of mortgage assets and improve the prospect of repayment of the construction sector’s ever high non-performing loans.