A total of 4,000 people gave up their houses under the provisions of the debt discharge law, according to Eugen Radulescu, head of the Financial Stability Department of the National Bank of Romania (BNR).
The debt discharge law, whose provisions allow for the discharge of debt obligations assumed through credit agreements, was published in the Official Gazette on April 28 and entered into force on May 13. According to Radulescu, the effects of the law on the market are not positive.
According to Radulescu, starting with 2013, the market has experienced a positive trend, both in terms of real estate assets as well as in what net financial assets are concerned. However, the BNR official warned that, in his opinion, 2016 will not see the same positive developments. Should the debt discharge law still be in place by the end of the year, Radulescu argued, the value of real estate assets will keep on decreasing. Accordingly, the market will be depressed, will enter a process of compression, leading to a drop in the value of all real estate assets.
Moreover, the BNR official argued that due to a “psychological factor” currently at work, people will notice that they are less rich because the real estate assets they own are not as valuable as they were before. According to Radulescu, the compression will not exceed 5 to 10 percent, but its effects will still be felt.
To date, Radulescu estimates, after the debt discharge law entered into force, only 4,000 people gave up on the real estate assets they bought, from 10 million property owners. According to the BNR official, ultimately, the law will cost everyone very dearly, as everyone has something to lose when it comes to its provisions.
According to a June 8 statement released by the National Bank of Romania, the bank does not endorse the figures released by the head of the Financial Stability Department, adding that the number of 4,000 should be read as a personal estimate of Eugen Radulescu.