The government backed program First Home (Prima Casa) could be changed into the New Home program meaning that beneficiaries can obtain state-guaranteed mortgage loans only for the acquisition of newly built homes, according to the a government program for 2013-2016 which was recently made public. However, no specific details were given so far as to when and how the change will take place.
The measure is meant to encourage the construction of new housing projects but market representatives say the most immediate effect could be sharper price decreases for old apartments and houses.
First Home (Prima Casa) was released in 2009 as an incentive for the housing market. The state guaranteed loans of up to EUR 60,000 (old apartments) or EUR 70,000 (new apartments) thus allowing access to mortgage loans to many people who otherwise couldn’t qualify. Beneficiaries of the Prima Casa program could buy an apartment or a house by making an advance payment of only 5 percent compared to 20-25 percent for regular mortgage loans. Until now, some 80,000 mortgage loans were granted under the Prima Casa scheme totaling some EUR 3.5 billion.
The program has also prevented the residential market, especially that of apartments and houses built before 1990, from experiencing a more abrupt decrease in recent years.
Average apartment prices in Romania’s main cities reached EUR 986 per sqm at the end of November 2012, down 52 percent against the record EUR 2,058 per sqm reported in March 2008, according to a Imobiliare.ro repor