Housing Market Developments in Cyprus

Leonor Coutinho, Julien Castiaux, Jean-Charles Bricongne and Nicolas Philiponnet

No 38, European Economy - Economic Briefs from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This study analyses demand, supply and price developments in Cyprus, in the run-up to its banking crisis and the early years of the recovery, analysing also new information on prices in levels. It further looks into alternative models to forecast house price inflation in Cyprus taking into account particular country characteristics and developments. Although there are many difficulties with this exercise, related to data availability, this analysis constitutes a first step in creating a database of relevant data and understanding the empirical correlation between potential explanatory variables and house prices trends. There appears to be a correlation between house prices and purchasing capacity, deposits, foreign sales, housing stocks, and NPLs. The presence of higher NPLs in particular appears to drag house prices down. High NPLs not only indicate credit tightening, but they also reflect pressure on households and businesses for real estate asset disposal as a mean to assist deleveraging, and therefore an ensuing increase in real estate supply.

Keywords: Cyprus; house prices; housing market; forecasting; global financial crisis; sovereign debt crisis; property rights; foreclosure legislation; Coutinho; Castiaux; Bricongne; Philiponnet. (search for similar items in EconPapers)
Pages: 24 pages
Date: 2018-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecobri:038

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