ESTATE agents yesterday dismissed fears of a property bubble after the Central Bank expressed concern at the possibility of a slump in prices with the sharp increase in loans for real estate investment on the island.
In a circular on Monday, the Central Bank warned that the increase in financing for property was risky for both creditors and debtors since it would boost the supply at a time when it was not clear whether there was enough demand.
The Central Bank urged commercial banks to investigate loan applications thoroughly and decided to lower the loan barrier from 80 per cent to 70 per cent of value of the property.
The circular said bank credits for buildings and constructions for January to August 2003 had reached £99 million, compared to £65 million last year, 39 per cent of the total loans granted by the banks.
According to the relevant data gathered by the Cyprus Statistical Service, the number of building licences for the period January-August 2003 increased by 20 per cent compared to 2002, while the total value of licences issued reached £672 million (+23 per cent) against £548 million in 2002.
According to the statistics, the increase in building licences is down to the increase in licensing by the municipalities of Paphos, Larnaca and Famagusta.
But real estate agents G&P Lazarou yesterday dismissed the Central Bank’s concerns, saying the value of property would remain the same.
“Property prices are not high, demand is more than supply,” Petros Lazarou told the Cyprus Mail.
“A bubble cannot be formed with land,” he said.
“You can’t produce land, you can’t move land and you can’t import land. You can’t take a house from Yeri and take it to Aglandja,
“Property has nothing to do with the Stock Exchange, because real estate agents have been on this island for 100 years. There is a Land Registry Department, where you can deposit your title deed, you are guaranteed not to lose money and you can force people to transfer the title to your name,” Lazarou added.
“With the CSE they were trading pieces of paper, with investors buying in the names of their dead relatives, but with property you are buying cash for cash.
Lazarou said banks were always careful with loans, saying they would not just loan money to anyone; he said that lowering the loan threshold from 80 per cent to 70 would not really make any difference.
“Those who evaluate the land could say it cost less or more,” he said.
“I could say the value was £100,000 and another person could tell you it cost £130,000.
“But property prices will definitely not slump, because supply is limited and demand will inevitably remain stable or increase,” he said.
“Young couples will not stop buying houses, students will not stop coming here to study and the EU will open up the market for people from abroad.”
