“The investment for citizenship scheme is still playing its role in market growth. Transactions involving foreign investors have more than doubled with Limassol and Paphos having the lion’s share”
as a surprise that Nicosia is leading the statistics regarding building permits.”
Other data shows that Nicosia has seen property sales go from 1200 in 2016 to 1485 in 2017 with current data indicating that sales in 2018 will surpass those of last year.
Cypriot demand for housing was put on ice during the years of the crisis as people were living with the uncertainty of the times but as the economy grows confidence is back and more mortgages are available.
An increase in the numbers of students studying at the Nicosia-based universities has created a shortage in housing which has, in turn, pushed up demands with more flats being built.
However, the high number of NPLs linked to property is a negative factor.
Chairman of the Cyprus Property Owners Association George Mouskides, said that he is not concerned so much over the growing repossessed property portfolios of the banks, as he is over the sale of asset-backed bad loans to investment funds.
“Banks have been very reasonable and cautious so as not to cause damage or a crash in the market,” said Mouskides.
The Bank of Cyprus sold NPLs to the Apollo Fund that are linked to some 9,000 properties.
BoC has sold a portfolio of 14,000 loans with a nominal value of EUR 5.7 mln which are linked to assets worth 2.8 bln at half the price (1.4 bln).
Mouskides, however, feels that funds wanting to sell off their portfolios at values much lower than the market rate may not be a plausible scenario.
“Just like banks, funds will investments and not cause an also seek to abrupt drop protect their in prices by unloading a large number of properties to the market”.
“I do not expect to see funds selling off properties at prices below 75% of their estimated value. Sales carried out these days are usually with a price tag of 80% of the property’s estimated value. It would not be the end of the world if prices fall by even 5% as the most important thing now is to keep prices at a healthy level,” argued Mouskides.
He believes the high levels of asset-backed NPLs are currently providing a ceiling on property prices, keeping prices at a manageable level with a small growth, rather than posing a threat to the market.
Meanwhile, the Movement Against Repossessions has accused the banks of planning to sell-off people’s homes immediately after acquiring them, in order to make a quick profit.
Evgenia Moyseos, representative of the movement told the Financial Mirror that banks are looking to get rid of the homes repossessed as soon as possible either by unloading them onto the market through auctions and sale procedures or by selling the property-backed NPLs to investment funds.
She said the banks are even targeting people who have agreed to have their loans restructured and are sticking to their repayment plans.
“People who have agreed to everything the bank has asked from them, are getting notices that their homes are to be sold at auctions which are to take place in February and March,” said Moyseos.
She said that homeowners are given ten days to respond.
“Ten days is nowhere near enough to respond and file a motion to have the auction stopped, which is the only course of action available and banks are aware of that.”
Moyseos criticised the government, calling its NPL management body and the ESTIA protection scheme as ineffective.
“There is no NPL management body… As far as the ESTIA scheme is concerned it won’t start before 2019, if ever, while houses are already going under the hammer,” said Moyseos.
Main opposition party AKEL is preparing a bill which aims at putting a stop to banks sending out repossession notices en masse. AKEL has also censured the Central Bank for “not forcing banks to promote viable long-term loan restructures, allowing them to move ahead with mass repossessions”.
The International Monetary Fund has expressed concern about the moral hazard of the plan, which covers almost all households rather than just those targeting vulnerable groups.