The role of the banking system, the private investors and the government in the rise and fall of the Cyprus property market

Abstract

The property market in Cyprus is of enormous importance to the economy as it plays an important role in the wealth of households and portfolio investors alike (Boydell and Clayton, 1993). During the last decade in Cyprus, due to various socio-economic changes (such as the liberalization of the financial markets, low interest rates, increase in stock market returns, increase of the purchasing power of sterling against the euro and the accession of Cyprus to the European Union and the Eurozone), property values witnessed phenomenal growth particularly during the period between 2002 and 2008.