Cypriot properties sector rebounds after declining since 2008

The properties sector in bailed-out Cyprus is displaying signs of rebounding after being in a continuous decline since late 2008, a leading property developer said on Friday.

Pantelis Leptos, chairman of the Cyprus Land and Building Developers Association, said property sales rose by 17 percent during the first four months of 2015 relative to the same period last year.

"For the first time since March 2013 (when Cyprus was bailed out) the number of building licenses has stabilized with a parallel increase in both the value and the volume of constructions," Leptos told Xinhua.

He added that most of the factors which had caused the decline, such as lack of liquidity, high lending rates, lack of trust and a climate of uncertainty and insecurity, have been eliminated.

"There is a series of positive developments which send out a clear message that better days lie ahead for both the construction sector and the economy in general," said Leptos.

He pointed out that the constructions sector has the biggest single share in economy, contributing between 16 and 17 percent in the eastern Mediterranean island's Gross Domestic Product.

"Given its size and the fact that it can drag along many other sectors, a slight recovery can make a big difference in efforts to return to economic growth," he said.

Cyprus received a 10-billion-euro financial assistance package in March 2013, after a recession which started in 2011 and caused the country to be shut out of international markets. The bail-out was conditional on applying a strict austerity program which involved restructuring public finances and resolving of the the banking system.

The resolution of the banks, which had to recapitalize after suffering huge losses on account of the depreciation of the Greek sovereign debt in 2012, led to a steep rise in the number of non-performing loans and a sharp drop of property values.

The Cypriot economy performed much better than international creditors - the Eurogroup and the International Monetary Fund - have projected and is expected to record a modest growth this year after 14 consecutive quarters of contraction.

The increasing demand for housing was reflected in the slowdown of the decline of property prices during the first quarter of 2015.

Central Bank of Cyprus data just released showed that the drop in housing prices was the lowest ever - just 1 percent in the first quarter of 2015 from 2 percent in Q4, 2014. It was also the lowest since Q4, 2012, when the drop in house prices started to accelerate.

On a year-on-year basis, the drop in property values amounted to 6.5 percent relative to a yearly drop of 8 percent in Q4, 2012.

The Central Bank said current property prices are at the level of 2006, when an excessive demand for housing loans led to an overheating of the property sector.