The collapse of the housing market started two years ago, after prices reached an all-time high in March 2008, of almost 2,100 euros/square metre, which means owners asked for 161,000 euros on average for a three-room apartment, according to a ZF analysis.

In the meantime, demands have been adjusted, and appear to have stabilised over the last six months at around 90,000 euros for the same home. This amounts to an almost 50% decline over the last two years.

The Government has laid out quite clear rules as far as apartment prices are concerned: guarantees for a loan of 55,000-60,000 euros and a 5% VAT on prices of less than 380,000 RON (around 92,000 euros).

What happens to apartments whose prices exceed this value? VAT is 19% for the whole sum (you pay a 19,000-RON VAT for a 380,000-RON apartment, while for an apartment that costs 1,000 RON more, you pay a 72,000-RON VAT, i.e. 19% for the entire amount), whilst in order to get a "First Home" loan, a 40% down payment is needed if the price exceeds 90,000 euros.

Here is what does a developer who has completed a project and has 380 apartments for sale, especially three-room ones, whose prices start from 100,000 euros, says:

"In Bucharest there is a rather large stock of completed apartments, that people cannot buy. The Government should endorse the acquisition of these apartments because banks will not grant further funding until these apartments are sold (...)."