was 2.7% in December 2011, down from 3.0% in November. A year earlier the rate
was 2.2%. Monthly inflation was 0.3% in December 2011. For Cyprus the annual inflation rate
for December was at 4.20% , compared to a 4.00% in November 2011.
• The euro area
was 10.4% in December 2011, unchanged compared with
November. It was 10.0% in December 2010. For Cyprus, seasonally -
rate was at 9.3% for December, compared to 9.0%November 2011.
• Following the downgrading of three banks [ Bank of Cyprus
(BOC), Marfin Popular Bank (MPB) and Hellenic Bank's (HB)] Fitch Ratings
agency has downgraded Cyprus, to a notch shy of junk. Fitch said
"that while the
Cypriot government's propensity to support banks remains unchanged, its ability
to do so has been reduced as reflected in the downgrade of Cyprus' rating.
Cypriot banks have varying degrees of sovereign debt and loan exposures to
Greece, with Marfin having the largest. The Bank of Cyprus and Marfin have
submitted capital raising plans to the Central Bank of Cyprus to meet higher
regulatory requirements by end-June 2012."
Cyprus Property Market
The number of real-estate transactions in Cyprus rose in
January 2012 to an 18-month high of 803, from 522 a year earlier, a 54 percent
increase, according to the latest figures released by the
Department of Lands and Surveys. The increase resulted from a drop in
property prices and cuts in transaction fees and value-added tax for main
|| Change %
• Banks are considering
increasing housing loan interest rates
in light of the tough conditions in the sector
and the increased risk in the Island’s property
market, according to
The liquidity condition in the domestic and
European markets has kept the cost of deposits
high, forcing banks to readjust their lending
rates. Total housing loans to Cyprus residents
in 2009 stood at €1.9 billion while in the first
eleven months of 2011 they did not exceed €0.3
billion. Lending conditions will deteriorate in
2012 due to the capital challenges that the
banks face. Bankers expect that both offer and
demand of housing credit will drop in 2012,
intensifying pressures on the property market.
• Memos to the Interior and
Finance ministries will be sent by organized
groups to facilitate foreign investors to
acquire Cypriot passports and permanent
residence status. On the initiative of the
Office of "Antonis Loizou & Associates" on
January 10, 2012 meeting was held with the
President of the Chamber Mr. Pilides Phidias, to
discuss the theme
"Passport to foreign investors and foreign
permanent residence in the housing market."
The meeting was also attended by
Director Mr. Sotiris Sotiriou and
representatives of CIPA, Mr. Lakis Tofarides,
president of the Association of Real Estate
Developers and other officials. The Minister of
Interior was invited but did not attend.
It was found that the above measure is positive,
while encouraging investment, but the
implementation of the current data make it
unworkable. It was agreed that attendees submit
memoranda to the KEBE, which will undertake to
promote the matter both to the Ministry of
Interior and the Ministry of Finance.
• A reduction of 18%
was recorded in November 2011 in the number of
building permits, compared with
November 2010, while a decrease of 13.6% was
recorded in the number of building permits
during the period January - November 2011 versus
the same period of 2010, according to data
released Tuesday by the
Statistical Service. The number of permits
issued by Municipalities and District Offices in
November 2011 stood at 601 compared to 733 in
November 2010. According to the figures, the
total value of permits in November 2011 reached
145.1 million euros, compared with 233.5 million
during the corresponding month of 2010.
Global Property Market & Economy
• U.S. employment growth accelerated
last month and the jobless rate dropped to a near three-year low of 8.5 percent,
the strongest evidence yet the economic recovery is gaining steam.
The unemployment rate fell from a revised 8.7 percent in November to its lowest
level since February 2009. A string of better-than-expected U.S. data in recent
weeks has highlighted a contrast between the recovery in the world's biggest
economy and Europe, where the economy is widely believed to be contracting.
• US home sales continued to rise in
December 2011 for the third consecutive month according to the latest
figures from the
National Association of Realtors. Volumes were up 5% year-on-year to a
seasonally adjusted annual rate of 4.61 million in December from 4.39 million in
November. The numbers are based on completed transactions from multiple listing
services that include single family homes, town homes, and condominiums.
• Eastern Europe property investment
activity doubled in 2011. Investment activity in the core Eastern Europe
property markets of Poland, Czech, Slovakia, Hungary and Romania increased in
2011, according to global property consultant
Cushman & Wakefield. It reached €6.1 billion, more than double the €2.9
billion invested in Central Europe during 2010. Poland continues to lead the
region, but Czech experienced the largest increase in transaction volumes year
on year, increasing from €479 million in 2010 to €2.2 billion in 2011. Poland
remained in front with €2.58 billion transacted in 2011. Hungarian investment
volumes increased from €240 million to €728 million, Romania edged forward with
volumes increasing from €241 million to €320 million, whilst €263 million was
transacted in Slovakia in 2011, up from €53 million in the previous year.
• UK economic activity shrank by 0.2% in the last
three months of last year according to official figures. It marks a sharp drop
in economic activity from the third quarter of 2011, when gross domestic product
(GDP) expanded by 0.6%. The figures, from the
Office for National Statistics(ONS),
are a preliminary estimate, which could be revised either up or down by 0.2%.
The ONS figures also show that the economy grew by 0.9% during 2011.
• Average house prices in England and Wales were £160,780
in November as values increased by 0.3% on October, the newest figures
(published Friday 30 December) by the Land Registry show.
The data from the Land Registry's flagship
House Price Index are regarded as the most reliable figures as they are
taken from actual sales. The only region in England and Wales to experience an
increase in its average property value over the last 12 months was London with a
rise of 1.4%.
• House price growth remains weak on an underlying basis, despite
prices rising by 0.6% in January, according
to the latest
Halifax House Price Index. House prices in the three months to January were
0.9% lower than in the preceding three months. This was the fourth consecutive
month that this measure of the underlying trend has been slightly negative.On a
monthly basis, house prices increased by 0.6% in January. This was the second
rise in the past six months and the first since October.
Cost of Debt
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