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Stress test on Cyprus property prices records no shock

February 11, 2020 at 8:58am
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Cyprus has recorded a minimum fall in real estate prices compared to other Eurozone countries, based on the European Banking Authority stress test’s extreme scenario on systemic banks.

It seems that after the shocking fall in property prices in Cyprus in 2014, the state of play is now completely different, Phileleftheros reports.

Systemic banks such as Bank of Cyprus, Hellenic Bank and RCB Bank record a mild drop in the 2020-2022 EU-wide stress test.

House prices will cumulatively fall by 4.2% within the Eurozone and all across Europe. In Belgium, EBA technocrats predict that in the extreme scenario the fall will be 25.2% during 2020-2022 and this is the highest within the Eurozone. And the second highest drop will be in Luxembourg.

For the Austrian systemic banking system the prediction is for a 24.5% fall in property prices, and 13.5% for Ireland which has been supported for years with EU memorandum programs. Ireland is where real estate was the reason behind the bubble in the country’s banking system.

In Spain, the fall in house prices is estimated at 11.9% and 16% in Portugal. For Greece, the extreme scenario’s fall in house prices is estimated at 5.8% which is the second lowest after Cyprus.

In Germany, stress tests show systemic banks having a cumulative fall of 15.1%, 14.6% in France, and also 14.6% in Slovakia. In Estonia, systemic banks have the extreme-endurance test recording a drop of 14% and a 12.9% drop in Finland.

The highest fall in the extreme scenario for Belgium’s systemic banks is 31.1%. For commercial real estate in the Czech Republic the drop is estimated at 27.7%, in Germany at 20.6%, in Luxembourg and Austria at 24.5% respectively, in France at 19.7%, and in Finland at 17.6%.

In Spain, where banks got support from the state and with real estate being a real problem, the fall in commercial property prices is cumulatively estimated at 13%, 11% in Ireland and 15.3% in Portugal.

As usual, a stress test is based on two scenarios involving key economic figures over the three year period of 2020-2022: an absolute and an unfavourable one.

 

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