The Real Estate Market Report provides an overview of the major economic factors affecting the industry as well as a summary of the recent trends and activity.
It is manifested by the improved fiscal indicators that the Cyprus economy is slowly entering a path of recovery,although challenges still remain. In particular, the Cypriot economy recorded growth in the first quarter of 2015, for the first time since the second quarter of 2011, despite contrary projections of the European Commission that the economy would shrink by 0,5% in 2015.
The adoption of the insolvency framework by the House of Representatives and the implementation of the law on foreclosures last April, have resulted to a staff-level agreement in May, during the sixth review mission, in relation to Cyprus’ Economic Adjustment Programme.
Following these developments, the yields on the Cypriot bonds reached a five year low, as the yield on the Cypriot 10-year bond (maturing in 2020) in the secondary markets fell below 3,5%. Moreover, following the approval of the European Stability Mechanism in the framework of Cyprus adjustment programme implementation review, the Central Bank of Cyprus has begun purchases of Cypriot government bonds in the secondary market, in the context of the European Central Bank Quantitative Easing Programme (QE).This will allow the Cypriot economy to be safeguarded against any turbulence in the eurozone and facilitates its next attempt to issue government bonds to the international markets.
Confidence in the real estate market seems to be improving.There are indications that property prices and rental rateshave reached their lowest points, however the excess supply of properties in the market, as well as the practical implementation of the insolvency framework and foreclosure laws through the auctioning of the mortgaged assets is expected to influence the market. On the one hand, it will attract investments and financing to new projects, that were postponed because of financial difficulties and, on the otherhand, the process may put pressure on the prices of specific kinds of properties.
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