The number of transactions with houses and land plots in Romania declined to 241,583 in the first five months of the year, nearly 60,000 (20%) fewer than in the same period last year, according to real estate consultancy firm SVN Romania.
The number of deals financed under Prima Casa (First Home) government-backed guarantees program went down by 40%, which explains the overall drop.
The rising construction costs, explained by supply-side factors (owners of old apartments expecting the prices to keep rising at fast pace and constructors facing higher costs) explain the sluggish market as well.
Old apartments owners raised asking prices by 4% in Bucharest, compared to last year, while countrywide the rise was 3%.
The Prima Casa program (responsible for roughly one-third of the market deals) lost ground as buyers reported higher incomes thus failing to meet the requirements for state guarantees and separately holding enough resources to pay higher upfront sums for standard mortgage loans.
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