ECONOMY

Cash crunch grips Cypriot property market

Property prices in Cyprus fell by up to 20 percent on an annual basis between July and September, a survey showed on Tuesday in the wake of the island’s banking crisis.

Property values on Cyprus grew steadily from about 2000 to 2009 as Europeans, particularly Britons, bought second homes and the country’s booming banking industry extended credit.

But since then the property market has struggled as banks slid into a crisis that eventually forced Cyprus to seek help from the European Union and International Monetary Fund last March.

On an annualized basis, property prices dropped 20.2 percent for retail space, while the prices of homes and apartments dropped 11.1 and 14.6 percent respectively, an index compiled by the Cyprus branch of the Royal Institution of Chartered Surveyors (RICS) showed.

A surge in unemployment to a record 17 percent and a gloomy economic outlook are deterring buyers.

Those who were interested were unable to access bank finance or their deposits, RICS said.

International lenders expect Cyprus’s economy to contract by 7.7 percent this year and 4.8 percent in 2014.

The major districts of Nicosia and Limassol, the least affected property markets until the second half of 2012, recorded the steepest price falls in the latest survey.

Other districts which registered steeper declines earlier appeared to be nearing a trough, RICS said.

[Reuters]