Romania to further finance housing program

17 February 2010

Romania's government on Wednesday raised the upper guarantee cap for first-time homebuyer loans to €75,000 per loan, up from the previous cap of €60,000, Finance Minister Sebastian Vladescu said.

Vladescu added that the larger guarantees will apply to buyers who form an association with the aim of building new homes, while the guarantee for individuals who buy a new apartment or house will be capped at €70,000.

Such associations must include at least seven people to benefit from the state loan guarantee. In addition, the associations must first own the land on which the future building will be erected.

Romania is still facing a shortage of sufficient and proper housing and the government's decision came after significant real estate growth in recent years reversed and the market began to stagnate, largely as a result of the global financial crisis.

The local credit market has also tightened, leaving Romanians with less cash to spend on property.