26/11/2003 09:02
In a confidential circular sent to the commercial banks on Monday, the Central Bank sounded the alarm for the prospects of the property market in Cyprus. According to StockWatch sources, the Central Bank emphasized the significant increase in loans granted for investments in property and warned that there might an abrupt slump in property prices.
According to the circular, the increase in financing for property projects is risky not only for the creditors, but also for the debtors, since it boosts considerably the supply of property, at a time when there are no indications that the demand for property is sustainable.
The Central Bank urged the banks to be more conservative on this issue and decided to lower the loan barrier for property investments to 70% of the value of property.
According to CB figures, bank credits for buildings and constructions for January-August 2003 reached £99 million compared to £65 million in 2002, which is 39% of the total loans granted by the banks.
According to the circular, the increase in financing for property projects is risky not only for the creditors, but also for the debtors, since it boosts considerably the supply of property, at a time when there are no indications that the demand for property is sustainable.
The Central Bank urged the banks to be more conservative on this issue and decided to lower the loan barrier for property investments to 70% of the value of property.
According to CB figures, bank credits for buildings and constructions for January-August 2003 reached £99 million compared to £65 million in 2002, which is 39% of the total loans granted by the banks.
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