Instalments for three rooms: from 600 to 350 euros in two years

The monthly instalment of a loan for the purchase of a three-room apartment in Bucharest has dropped from around 600 euros to 350 euros in less than two years amid the almost 50% lower prices for housing units and the lower interest rates through the "First Home" programme, a ZF survey reveals.

Whereas in March 2008, when old apartments of Bucharest reached a high of around 2,060 euros/square metre, three-room apartments of districts such as Drumul Taberei or Titan cost 120,000 euros, according to ads posted on real estate websites. Banks asked for a 10-15% down payment and the interest rate for long-term loans revolved around 7% per annum. Under those circumstances, for a 20-year 100,000 euro-loan, instalments revolved around 600 euros per month.

At present, the same apartment can be bought with a similar down payment (13,000 euros), but with a loan of "just" 57,000 euros through the "First Home" programme, for which the monthly instalment stands at 350 euros, on a 20-year period.

"I do not believe 'First Home' modifications will influence prices that much. Those who awaited the programme modification are likely to shift to new housing units, where developers are considering coming up with projects at lower prices," says Valentin Ilie, CEO of Coldwell Banker real estate consultancy.

As regards rental prices, a three-room apartment can be contracted at present in all peripheral districts of Bucharest with 350 euros per month.

In recent months, prices of old apartments of Bucharest have remained flat, at around 1,100 euros/square metre, and consultants believe no significant trends will be registered on short term.

What is important for the real estate market is how the "First Home" will be modified in mid-February, as developers are pushing for the programme to be directed toward the acquisition of new housing units. Such a move would have a deep impact over old housing units, whose sales have been mainly boosted by this programme.