The decline of real estate prices, even to half the record values of 2007 and 2008, have left many who bought homes with loans in a position to pay huge instalments, which no longer have anything to do with the current context.
In Budapest, a group of MPs of the ruling party last week came
up with a draft law aimed at awarding more protection to debtors,
with one of the measures being to adjust the amount left to repay
based on the current market value of the financed property.
Whilst in the spring of 2008 a three-room apartment sold in
Bucharest for 160,000 euros, now it can be acquired for around
80,000 euros, according to ZF’s real estate index.
Considering that people’s incomes have in many cases been cut, but
the bank instalments have not, the amount left for everyday
spending – i.e. for consumption – is even lower, and this affects
recovery even at macroeconomic level.
If the measure proposed by Hungarian MPs were applied, instead of
paying the instalment on a 120,000-euro loan (corresponding to a
25% down payment on the acquisition of a 170,000-euro apartment),
of 850 euros per month, clients would now pay just 560 euros per
month, corresponding to an 80,000-euro value. This would mean
290-euro savings, equivalent to 34% of the monthly
instalment.
On the Romanian market there are currently no concrete talks on
such measures.