Real Estate In Romania, It Follows A Crisis?

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After a few years of growth, the real estate market from Romania is facing first blocks. According to the National Agency of Cadastre Real Estate Advertising, in the first five months were sold over 200k housing. The best month was March, with 44.566 contracts, and at the worst one was January, with only 30.733.

In month May, in Romania was sold 44.456 housing. The number is dropping at 3.755 compared with the previous month. Worrying is that the number is also dropping compared with May 2018, with 14.338. In May 2019, the most active counties are Bucharest – 7.815, Ilfov – 4.175 and Cluj – 2.335. At the opposite pole are Alba – 247, Gorj – 245 and Olt – 96.

One of the reasons is the high prices of housing. Even if this year the prices maintained at the level of last year or even slightly decreased, prices are still high, and some of the Romanians are waiting to break the bubble.

Another reason is the instability of ROBOR, the coefficient that establishes the rate credit of `Prima Casa`. With increasing interest rate, Romanians didn’t rush to apply for credit. Considering that most of the sales were made through a `Prima Casa` funding, the number of contracts decreased.

A new national program

The Government is planning to change the national program `Prima Casa` with `O familie, o casa`. The new one should come to help the Romanians that wanna buy a new apartment or house.

We are coming with new measures to reduce the cost of financing for Romanians who want to buy a home. Specifically, we are proposing to increase the level of government guarantee from 50%, as it currently stands, to 80% of the value of the loan, stated the Prime Minister of Romania, Viorica Dancila.

The new program comes with some important changes. The maximum credit limit will be increased up to 570.00 lei, approximately 120.000 euro. The applicant will pay in advance between 5 – 10%. The interest rate on the credit will be fixed for the entire duration of the loan, 5.5% / year. Another important change is about the apartment or house bought. The house must have at least 2 rooms and a maximum area of 100 sqm. This program will encourage the purchase of new homes, built in the last 7 years.

The program will provide benefits that consist of lowering the percentage of the rate of interest. A family with a child (aged up to 18 years old or 26 if they have long-term education) or foster care for a child will have a discount of 1% from the interest rate. Families with 2 children will have a double discount of 2%.

According to the government, the new program (O familie, o casa) should replace the old one (Prima Casa) during 2019 or early 2020. We will see if this will have a greater impact compared to the previous one and if the Romanians will use it to buy a home.

Real estate experts estimate that this year the number of transactions will continue to decline and housing prices are expected to fall by as much as 10%.