Expanding help for first-time buyer scheme welcomed

STATE HELP As we went to press, the Government was preparing to expand Romania’s ‘Prima Casa’ (First Home) programme, which offers incentives to first-time buyers, to include the purchase of new housing units

February 2010 - From the Print Edition

Real estate players welcomed an expansion of this scheme, if this means it will extend to the purchase of more expensive properties.
Under the scheme which began last year, the Government offered guarantees for buyers to take out a mortgage on a property up to 60,000 Euro at low exchange rates.
But most of the properties sold under the programme were pre-1989 units, which helped the real estate market, but failed to give a boost to the ailing construction and development sector.
“We will focus on the construction of new units, to re-launch the construction sector,” said Prime Minister Emil Boc.
Real estate agencies and developers back the initiative of the Government, with many arguing that the guaranteed amount must be increased to 100,000 Euro.
New dwellings bear a five per cent VAT and their prices range between 900 and 1,000 Euro per sqm. In Bucharest, prices are also more expensive than in the country at large. The minimum-sized family starter-home, a 90 sqm three-room apartment, can cost 90,000 to 95,000 Euro plus VAT, which is out of the range of the current Prima Casa scheme, according to Ruxandra Cleciu, managing partner at Romanian real estate agency Neocasa.
Cleciu believes the state should set different guarantee thresholds - higher for new dwellings and lower for pre-1989 flats. But under these new provisions, she believes the market will only see a slight increase in volume.
Austrian real estate consultants Spiegelfeld’s general manager Daniel Fuchs supports increasing the threshold to 90,000 Euro. But he says the state should verify that homes under construction will be finished, so buyers do not lose their money if the firm goes bankrupt.
Some developers have adapted their offering to integrate into the existing Prima Casa parameters.
Australian real estate developer South Pacific is preparing a social housing project in Ilfov county with prices at 50,000 Euro per apartment. “The days of offering housing at extraordinary margins to the middle class is over,” says South Pacific general manager Andrew Prelea.