Economist and ex-banker Symeon Matsis speaking to the Sunday Mail, said that the fall in property prices would have been worse if the banks pressed developers to service their loans by reducing property prices still further to encourage sales. His statement confirms widely held reservations that property developers are receiving insufficient income from property sales to service their loans – and that the banks are not pursuing them for payment.

Developers arrears are on the increase and the banks are bracing themselves for a further haircut on their Greek bond holdings. Banks tentatively agreed in July to take a haircut of around 21%. However, analysts are now saying that they may have to accept losses of between 50% and 60%.

Mr. Matsis commented: “If the companies were pressed into selling their assets, this would cause a drop in the value of collaterals”.

The Cyprus cabinet has approved three draft bills designed to shore up the banks that are heavily exposed to Greek government bonds and to establish an independent financial stability fund as well as immediate action to ensure stability for the management of the financial crisis. Government spokesman Stephanos Stephanou, based on recent developments said that the three bills approved by the Council of Ministers offer the required institutional and legal framework enabling Cyprus to mediate and back the financial system, should the necessity arise.

The first bill will allow the government to step in and reinforce a bank’s liquidity if required. The second bill would create a fund to help steady the banking system due to heavy exposure to Greek sovereign debt (estimated at some €4.2 billions) and with a high risk of default. The third bill extends the existing special tax for credit institutions. Although there is no money to put into the fund, a package of austerity measures has been approved by the government which includes such stalwarts as cutting 1,100 already vacant positions in the civil service and reducing entry-level salaries for civil servants by 10%.

THE INVESTORS Chronicle reports that overseas home ownership has rocketed over the last 10 years with an estimated 500,000 Brits has purchased property overseas and it has been estimated that the value of their purchases increased from £10 billion in 2000 to a peak of £58 billion last year. According to property consultancy Savills, The price decline due to the credit crunch in many of the once popular foreign property hot spots means that the majority of the Britons who bought property in 2007 and 2008 will be in negative equity.

Monica Antoniades of Capital homes in Paphos said that the Cyprus property market is steadily reovering although there is massive reduction in the number of house purchases being completed. She said that People are still eager to buy in Cyprus, but they’re exercising caution, and waiting for the situation to stabilise before taking the plunge.

She commented: “I’m hoping things will improve, There are still people who can’t afford to buy in the UK, and they’re moving out here. People are just taking a more sensible approach.”

There has been some good news from the Cyprus land registry with sales figures for Cyprus from foreign buyers being relativity unchanged at roughly half their heights of 2006 with 10,766 purchases in 2006 and till August there has been 4709 purchses already this year. With the prices decline in tourist hotspots, buyers are currently faced with the dilemma of holding on for longer to get a better deal or want to buy it as an investment for long term. However, there is no denying that there are some great properties to be had at very reasonable prices in Cyprus currently.

Cyprus president Dimitris Christofias met Turkish Cypriot leader Mehmet Ali Talat, inside a UN-patrolled buffer zone near Nicosia’s disused airport which lies between the two communities to reunite the island for the first time in 34 years. President Christofias told reporters that it would end the suffering of Cypriot people and reunite the country. Mr Talat also agreed the president’s view and said that the aim of the fully-fledged negotiations is to find a mutually acceptable solution to the Cyprus problem.

A senior UN official said that the talks are “productive” and “fruitful,” adding that the two leaders agreed to resume negotiations on power-sharing. The property market in Cyprus particularly Northern Cyprus is set to benefit from peace talks in the, as tourism has already grown rapidly since word of the plans spread. Reunification talks boost the Turkish Cypriot economy, which could bring huge investment to the northern part of the island and facilitate infrastructure improvements.

In related news, Blue C Developments sees speculation over the unification results in rise in property prices.

Cyprus Property Magazine has reported that even the prices in some areas have almost halved, it has predicted that the market will pick up. In fact, it has reported that the housing market could bounce back and see growth as early as next year.

Solon Kourouklides, chairman of the Pancyprian Association of Real Estate Agents remains upbeat about the country’s property market, claiming the slowdown will be over by early 2009 and has commented that the external market has dropped by 30 to 40 per cent while the internal market has dropped by five per cent. The Global Property Guide suggested that Cyprus is set to see a sharp growth in its property market in the near future.

Meanwhile, industry experts said that this is an ideal time to buy property in Cyprus as there are some “great deals” and overseas property buyers could potentially snap up bargains in the country. Paul Collins, property editor at BuyAssociation added that foreign investors should take full advantage of the forthcoming price rise by grabbing a residence while they are underpriced.

Bloomberg.com has cited the reports of Office for National Statistics and stated that the number of people on the Mediterranean island will rise by 66 per cent by 2058. This is considered to be the largest increase in population in the whole of Europe. Property experts suggest that the conditions are right for further upward movement in the value of housing as the demand for high-quality housing and second homes will rise.

Housing market in the country may be set to benefit as demand for homes increases in the future. With the projected inflation of population, buying a house in Cyprus could turn out to be a lucrative venture. The average house prices are currently less than £150,000. Investors could also benefit from relatively low entry costs and can make substantial profit should they choose to sell a property at a later date. Cyprus Property Magazine has reported that prices in some areas have been dropped due to the downward trend in last 12 months but the market is tipped to pick up in 2009. Consequently, this is the right time to invest in Cyprus as investors could benefit from low prices.

According to the Telegraph, property prices in other popular European markets are in a state of decline. Meanwhile, Cyprus is apparently bucking this trend and continuing to experience growth.

Cyprus house prices started at around £77,000 and the house prices went up by an “impressive” amount last year. The prices are approaching those of similar markets such as Spain and the rate of house price growth in Cyprus is outpacing many other European countries. According to Financial mirror reports, the average price of a property on the Mediterranean island is now £132,135.60 and the values rose on a month-by-month basis by 3.7 per cent.

The official figures from the Royal Institute of Chartered Surveyors (Rics) revealed that property values in Cyprus went up by 15 per cent in 2007 whereas Spain saw growth of just three per cent throughout the same period. The figures are positive reading for prospective investors, as it means that their purchase would appreciate in value in the future.

Paul Collins, overseas property editor of BuyAssociation has commented that Cyprus is likely to experience surge in house prices over the next few months. He further said that the result of the property boom would be long-term and pertains to both commercial and residential buildings.

George Gabrielides, director of Leptos Calypso Hotels, said that Prices for real estate in Cyprus are comparable to prices in St. Petersburg. He added that Price for apartments start from $150,000 and for villas from $250,000. Cyprus offers good value for money, as houses and apartments tended to be cheaper than those in other European countries.

Mr. Gabrielides said that interest rates in Cyprus depend on the type of currency; anyhow the figure is rather low from 3.5 percent to five percent a year. He noted that nearly 200,000 Russians visit Cyprus every year. There are two Russian schools and three Russian newspapers in Cyprus.

Polina Yakovlyeva, the head of Elite Real Estate at Knight Frank St. Petersburg has said that the EU accession and rising property prices in Cyprus had attracted the attention of Russian investors. She said that Cyprus is the only island where fifty percent of property-owners are Russian and that is due to low taxes and low market risk.

This significant reunification talks between the leaders of the Greek and Turkish communities has already made an impact on the North Cyprus property market. The reunification talks urged the property investors to take advantage of the low prices which exist in the north of the island.

Richard Appleberg, CEO of Cyprop, commented that this is fantastic news for property owners and investors. He also added that the prices for property in North Cyprus have been around one third of those in the south of the island. Cyprop also reported that interest in the North Cyprus property sales picked up the pace once President Demetris Christofias was elected in February.

Overseas investors are suddenly starting to understand that there may not be much time left to invest to grab the low prices as the property prices is likely to increase in the wake of its recent reunification talks.

Cyprus’s entry into the euro earlier this year has also been highlighted as a development that could attract foreign property investors to the island. UK newspaper the Telegraph reported that Cyprus has huge growth potential to overseas buyers because of the changeover.

The Global Property Guide assessment of apartment prices in just about 50 cities in Europe, and revealed that Limassol’s average apartment rent per square meter is just 2,167 when compared to an average rent per square meter is 24,9000 in Monaco this is incredibly cheaper.

Still, the study found that rental yields in Limassol are comparatively profitable to those in Monaco with 4.38 per cent in Limassol surpassing the 2.43 per cent in Monaco.

Residential house prices in Cyprus picked up the pace during 2007 according to the results from the Buy Sell Home Price Index, rising by 19.2% for the whole year compared with 6.6% in 2006 and main reason referred to for the acceleration in house prices this year has been the anticipation of VAT on residential land.

Cyprus has lifted most capital restrictions and lowered interest rates on foreign investors, thereby granting them more benefits.

Cyprus has lot to offer any investor, with the onset of the euro and low interest, Property investment is showing good returns.

EU monetary affairs commissioner Joaquin Almunia welcomed the rousing reception of euro in the island and added that Cyprus has become even more integrated in the heart of the EU. This entry of Cyprus into the monetary union that has proven its worth in terms of stability and low interest rates has attracted overseas investors into the country.