Cyprus-Forum.com

[Bluejay]

Lana,
Thanks very much for that.
Much appreciated.
Bluejay

[simonwjones]

so..................les re-visitthis thread. Prices going up only

[Johnson&Johnson]

actually according to the buysell index prices have FALLEN for 3 months in a row

whether this is the start of the inevitable crash, or a mere blip remains to be seen

[Johnson&Johnson]

I wonder what will happen to property prices in Cyprus now that the Spanish bubble has burst... will foreign buyers prefer to pick up a bargain in Spain, and desert Cyprus altogether ? flying times to spain are much shorter from the UK, and flights much cheaper. Life in spain can be less expensive than it is here.

Maybe this will burst the Cyprus property bubble too ???

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Spanish Property Heading For A Tumble
Updated: 11:40, Wednesday April 25, 2007

There is good news for people wanting to buy a holiday home in Spain - and bad news for those who already have one. The Spanish property market is in danger of taking a tumble - shares in Spain's property firms fell dramatically on fears that the long-awaited crash is imminent.

Prices too high?The unease over the housing sector was triggered by a sharp fall in shares in Spanish property company Astroc.

It lost more than 60% of value in less than a week after an auditor's report raised concerns over its finances.

The market was also spooked by comments about the Spanish property sector by the president of French construction firm Eiffage, Jean-Francois Roverato.

Mr Roverato justified rejecting an all share takeover offer from Spanish construction group Sacyr on the grounds that the Spanish firm's property assets in its home market "could very soon be revised down."

The developments follow signs that property prices - which have soared over the past decade helping to fuel economic growth rates and the profits of builders - are finally levelling out.

Household debt has reached record levels, restricting the amount of money people have available.

Housing prices rose 7.2% year-on-year during the first quarter, their lowest increase since 1999, according to government statistics.

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AND MORE...
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Fears for Brits over Spanish property market collapseBack to Social Housing
Published: 25/04/2007 - 12:28:09 PM Printable version

Fears for Brits over Spanish property market collapse

The country is over-housed, households are over-indebted and the construction industry continues to churn out homes.
Lombard Street Research Fears that a Spanish property bust could claim thousands of British victims were raised today following a massive slump in the country's real estate market.

Panic selling of shares in Spanish property firms on Monday signalled an end to the over-inflated housing boom, with price falls a real possibility, experts said.

It will come as bad news to British holiday home owners, with an estimated 250,000 Spanish properties believed to be in the hands of UK citizens.

Spain has continued to remain a popular destination for British overseas property buyers, many of whom have benefited from price rises over the last decade.

But economists at Lombard Street Research warned that the housing market in Spain is about to implode.

They said: "The country is over-housed, households are over-indebted and the construction industry continues to churn out homes."

The situation is in contrast with the UK, where the problem has been a lack of new housing being built, which in turn has led to high house price inflation.

Low interest rates in Europe have fuelled the property market in Spain in recent years, but a slowdown is now deemed to be inevitable by market watchers, amid fears of a significant correction in the Spanish economy.

Leading construction companies listed on Madrid's IBEX index took a hit yesterday as investors offloaded shares in anticipation of the slump.

The index closed down 2.7%, with banks, exposed to the mortgage market, following property firms into the red.

High levels of construction have seen Spain become the best housed nation in Europe, and figures show they have the debt to show for it.

Household debt has risen to 133% of disposable income, up from 75% in the late 1990s - sparking fears of a mortgage crises.

Diana Choyleva, director and chief economist at Lombard Street Research, said holiday home owners who flocked to Spain over the last couple of years could now see the price of their investment fall.

She added: "This is not good news for UK investors in Spain. The problem is in supply. We have had over investment on a gigantic scale and it has already started a slowdown in house price growth.

"We will definitely see house price growth stop and falls in nominal prices are likely in Spain over the next 12 to 18 months."

Copyright Press Association 2007.

[Sotos]

I am listening these for years. Even this thread is one year old! If those that said years ago that the property market in Cyprus would crash were instead buying some property then today they could sell that property and make good profits.

[raymanuva]

Tonns of unsold properties and yet prices are still going up... )

[Svetlana]

BuySell Price Index shows that prices have risen some 10% in the last 12 months; there are regional variations of course.

Lana

[miltiades]

I am listening these for years. Even this thread is one year old! If those that said years ago that the property market in Cyprus would crash were instead buying some property then today they could sell that property and make good profits.

The speculation that surrounds the property market crushing in Cyprus reminds me of the speculation that the Cyprus pound would crash following a brief period way back in late 90s when against STG it stood at almost level
ie pound for a pound.
The predominant factor to consider is that the Cyprus economy is not only small but very compact and adjustments can be quickly put into effect to counter any adverse economic reactions either in the property market or indeed the Services market.
My prediction is that prices for property will remain stable might even come down a bit but most definitely there will not be a property crash .

[Johnson&Johnson]

Cyprus banks go into lending frenzy
17/05/2007
-- Advances up 21%, deposits surge 21% to CYP 20 bln

Cypriots have gone on a massive borrowing spree encouraged by easy and flexible loan products from the commercial banks with the majority snapping up property, which in the process has fuelled prices ever higher.

The revelation by the island’s two largest banks, Bank of Cyprus and Marfin Popular Bank that during the first quarter of the year, their loan portfolios galloped at 23% and 28% respectively has been confirmed by figures released by the Central Bank of Cyprus, which shows that total advances by all banks in Cyprus surged 21.3% YoY to CYP 12.51 bln, or a whopping CYP 2.2 bln compared to CYP 10.31 bln a year ago in March 2006.

The biggest advance in loans has been channeled into building and construction loans, up 31% YoY to CYP 2.36 bln by contractors and by 28.5% with respect to private loans to CYP 6.3 bln from CYP 4.95 bln a year ago in March. The third largest component of loans, domestic and foreign trade was stable at CYP 1.5 bln.

The Cooperative Credit Societies, meanwhile, increased their combined loans by half a billion to CYP 4 bln by March compared to CYP 3.59 bln in March 2006, but the pace of advance in the first three months of 2007 amounted to CYP 52 mln, confirming that they are losing market share to the banks.

-- Lending frenzy

The lending frenzy in March must have been a record considering that in March 2007 alone, total lending surged by CYP 594 mln compared to February 2007, while in the first three months of the year, total lending is up CYP 830 mln.

Compare that to the total Jan-Mar 2006 increase of CYP 342 mln and one realizes the dimension of the lending craze now dominating the country.

The fact that most of the new loans are taken to buy property means that while property prices continue to head higher, at least the trade deficit and the rate of inflation have not been adversely affected. Inflation by March 2007 was up 1.8% YoY, while total imports were up only 3.3% in the Jan-March 2007 period with the trade deficit 8% higher, but mostly because of an 11% drop in exports.

-- Property bubble?

Residential house prices in Cyprus rose by 1.1% over the previous month in April, according to the BuySell Home Price Index, as the index reached 122.44 and brought the average home price in Cyprus to CYP 95,394 (EUR 196,680).

Compared with the same month of 2006, prices rose by 9.6% in April, slightly lower than the 9.9% increase recorded in March.

“With so much lending geared to the property sector, one would expect a much higher price increase in housing, but it seems that developers are busy off-loading property, reducing their inventory levels,” said a worried analyst, remembering the “crazy” days in 1999/2000 when easy money directed by the banks to the stock market, led to the creation of a bubble, after which equity prices crashed when the Central Bank tightened the flow of money and forced banks to halt such lending.

Will the Central Bank take action and start imposing penalties on bank for exceeding lending targets? That is the million pound question since not many people know the views of the newly appointed Governor of the Central Bank of Cyprus, Athanasios Orphanides.

He does have the right credentials, considering that he worked at the Fed and has seen the ups and downs of the property market in the US, its long term impact on the economy and banks in particular. Orphanides is also aware of the sub-prime lending problems haunting the US property market and the economy in general, a problem that can easily be repeated in Cyprus.

Alternatively the Central Bank may attempt a soft landing of the economy, by ordering the banks to cut down on lending, or at least enforce the minimum criteria, which since last year stipulates that housing loans should not exceed 70% of the value of the property.

[JB Bear]

I agree with Johnson & Johnson, the property market will burst,

There are too many property developers on the ban wagon trying to make a quick buck, even the Cypriots are selling their houses for more than its worth.


i think Cyprus property market will be like the Spanish property market and it will collapse and when it does I'll be in there.