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| “FIRST HOME” PROGRAMME GAINING SHAPE 29/05/09 |
| (2009-05-30) |
| Last updated: 2009-06-01 14:08 EET |
A programme under which the Romanian state is to guarantee loans for the purchase of a first house might be operational starting July. Like many other former communist countries, since 1989 Romania has been facing a constant housing shortage. And although the construction sector has grown substantially over the past few years, the country is still a long way from solving the problem. A recent survey indicates that local housing supplies will catch up to the demand in as much as 32 years' time.
This figure pushes Romania down to the last position in a ranking that also includes Russia, Croatia, Hungary, Poland, Ukraine, Bulgaria, Slovakia, and the Czech Republic respectively. The survey also reveals that in 2005-2007, an average of 1.8 housing units per thousand inhabitants have been completed. Meanwhile, experts estimate, based on monthly incomes, that only 10 per cent of the people afford to buy a home, from their savings or loans.
Indeed, Romania reports the largest gap in Europe between housing prices and salaries: in 2008 alone, prices on the real estate market went up seven times faster than salaries. But although the housing market has been affected by the economic crisis this year, many Romanians still dream about owning a home. This is why the government headed by the Liberal Democrat Emil Boc, which also includes Social Democratic ministers, decided to give a chance to those who do not own a home yet.
This is how the “First Home” programme was born, which enables a certain category of citizens to contract a state-guaranteed loan of up to 60 thousand Euros, with only a 5 per cent initial down payment, and a 5 per cent VAT rate. Top-level governmental officials discussed the proposal Thursday with the managers of several banks interested in the technical aspects of the programme.
But some observers suspect the programme is designed to fuel populist attitudes, while others fear it would bring handsome amounts to certain contractors already protected by people in power. Still, the creators of the project claim that it is intended to meet the needs of young people in particular, although loan contracts are not aimed at a specific age bracket.
The programme is also expected to give a fresh boost to the construction industry, thus creating new jobs at a time when unemployment rates are on the rise. The questions related to this programme, which will become operational in July according to PM Emil Boc, are about how it will be applied, and the reaction of banks. In theory, banks should welcome the plan, precisely because loan default risks are covered by the state.
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