NICOSIA – ,The Central Bank of Cyprus (CBC) told commercial banks to shy away from the wholesale selling of mortgaged properties because it could lead to a sudden drop in real estate prices that have been driven up by foreign investors wanting to buy Golden Visas that come with European Union passports.

“Mass selling of properties could lead to a sudden drop in real estate values, thus creating a negative interactivity between the real economy and the banking sector,” the CBC warned in a report on financial stability posted on its web site, the Chinese news agency Xinhua said.

The central bank said that during 2018 the real estate market continued a gradual recovery thanks to the growth of the economy, driven largely by record tourism results, and the improvement in the real estate sector.

The prices of properties had contracted as much as 30 percent after the 2013 crisis when President Nicos Anastasiades got a 10-billion euro ($11.25 billion) international bailout to keep banks from going under after they suffered big losses in their holdings in devalued Greek bonds and bad loans to Greek businesses who didn’t pay back.

The report said the property prices started jumping in 2017 with an increase in demand of apartments by local buyers and luxury housing by wealthy foreigners, despite criticism the government wasn’t vetting them for money laundering or criminal activity.

Purchase deals submitted to the Land Registry Department during 2018 showed a yearly increase of 5.8 percent, the report added. Investment by non-Cypriot buyers represented 47.3 percent of registered purchase deals, of which 15.5 percent came from EU nationals and 31.8 percent from nationals of countries outside EU, said the news agency, with Chinese big investors in the European Union.

“The rise in real estate prices and particularly of apartments in some areas of Limassol district reflects extensive large infrastructure projects development and demand for high-value residence housing by non-Cypriots in the context of the Cypriot Investment Program,” the report said.

“Investment through the Cyprus Investment Program seem to have an indirect rising effect on real estate prices, and most notably on the prices of apartments, especially in sea-side areas of Limassol district,” the report added.