The financing costs for real estate in Romania are set to remain reasonable for the foreseeable future, but the market might register an increase of construction costs, said Ovidiu Sandor, the CEO of Mulberry Development, during Realty 2017, the event organized on Tuesday by Business Review.
Sandor suggested that any increase of financing costs will hit primarily those people looking to buy homes through Prima Casa, the state-backed loan guarantee scheme for Romanians that are buying their first home.
“Unfortunately, the state will be impacted because the buyers that have the highest potential to be impacted by such an increase are those under Prima Casa, where the state offers guarantees and unfortunately, we will foot the bill if we reach a high financing costs, which might see clients failing to keep up with the bank payments,” said Sandor, whose company is currently developing ISHO, the mixed-use project in Timisoara that has office and residential components.
He said that there shouldn’t be any problems if financing costs go up by 1-2 percent. He suggested that there is already a growth pressure on prices due to constructions costs and the increase of costs with the labor force or the lack of labor force.
“So, I don’t believe that we will see a drop in construction prices, but in the next years I would rather see a painful increase of these costs,” said the CEO.
Sandor added that the planned hike of wages announced by the government might also push house prices up.