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Home Prices Might Fall Once Financing For 2013 First Home Program Is Exhausted

Publicat: 19/06/2013, 15:48

Actualizat: 19/06/2013, 15:48

Over 70% of Romanians interested in buying a home want to make the acquisition through the state-guaranteed First Home program, as they are not eligible for other mortgage loans, therefore home prices are expected to drop in the next three months once financing through the program is depleted.

Financing through this year”s First Home mortgage lending program has reached EUR490 million and 13,000 beneficiaries, and the remaining EUR300 million will be exhausted in three months at the current pace.

As most Romanians are eligible for mortgage loans only through the program, the exhaustion of financing would reduce demand for homes and eventually home prices, according to a survey conducted by HomeFinders.ro.

The survey polled over 464 prospective home buyers in Bucharest between May 2012 and May 2013.

Some 167 of respondents, or 36%, wanted to buy old apartments, and for over 70% of them financing was secured through the First Home program.

According to HomeFinders.ro, home transactions reached 22,000-24,000 last year in Bucharest and approximately 40% of them were financed through the First Home program.

Since the launch of the program in 2009, the national guarantee fund granted nearly EUR3.5 million in guarantees to 94,000 beneficiaries.

The average financing value throughout the duration of the program was EUR39,000 and 28% of guarantees were granted for the acquisition of homes built between 2008 and 2013. The default rate on these loans has remained low, at just 0.1%.

Beneficiaries of the program are people who do not own a home or own one smaller than 50 sqm, acquired through other means than the government-backed program.

Tags: home price survey

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