The recovery of property price in Cyprus is tenderly expected by the three largest banks in the country - Cooperative Bank, Bank of Cyprus, and Hellenic Bank. This change will greatly affect their business. For instance, taking into account that around twenty-one percent of the gross loans of Bank of Cyprus are its residential mortgages (counts about thirty-three percent of market share in the sphere), this bank will stand on its feet much stronger.
It’s known that the largest property lender has already gained an impressive quantity of real estate assets (of about 1.3bn Euros). And only after the price recovery, it will be able to benefit.
The same refers to the Cooperative Central Bank, which has mortgages equal to about thirty-seven percent of its total gross loans. By the way, about the half of the bank’s mortgages are not performing.
However, a certain rise in property price was felt last year, when around 7063 property transactions were registered. It was equal to 43% rise. What concerns the prices for residential property, the third quarter of 2016 was a little productive with a certain rise in price registered.
According to Moody’s statement, a gradual stabilization of the property market will be observed in the upcoming quarters. Besides, it won’t have an immediate impact on banks’ loan portfolio. All those loans, which were stated as non-performing (they count about the half of the total number of loans in the entire banking system of Cyprus) will be given a probation time period (roughly twelve months) after they are restructured. And only afterward, the government will classify them as performing again.