Deloitte: The Romanian residential market needs more government support

Prices on the Romanian residential market have been dropping for almost one year and a half and most specialists don"t expect a recovery before the second semester, a study made by Deloitte in the 27 EU member countries - "Residential development - The role of the governments in the real estate market of the European Union". There are signs that the Romanian banks could relax their lending. Under these circumstances, a government stimulus would be welcome, in order to support the gradual relaunch of the economy, Deloitte specialists say. Even though they appreciate the "First Home" program, the real estate sector agrees that more Government support is needed.

According to a press release sent to our editors, the players on the Romanian residential market have long ago anticipated the substantial impact the crisis would have on this market. The major real estate brokers have decided to shut down their departments specializing in the residential market, thus focusing on segments with greater potential.

The major economic powers, with numerous population, such as France, Germany, Great Britain and Spain, have passed several measures to stimulate residential development. However, the group of countries that passed such stimuli also includes less mature economies, that joined the EU recently, such as the Czech Republic and Poland.

The most popular measure (which has been implemented in 89% of the EU countries) is the exemption of real estate capital gains from taxation. Most frequently these taxes apply for specific periods of time and for homes used for individual purposes.

11 states have a mortgage guarantee fund which provides aid to individuals which have trouble making their mortgage payments. Several states, including Poland, Hungary, Slovenia and Great Britain, launched such funds in 2009, as part of their anti-crisis measures.

Residential development in the EU member countries is encouraged on a legislative level by deducting interest payments, tax exemptions for capital gains, reduction or exemption from VAT payments, acknowledging fiscal losses on rented apartments and the creation of mortgage guarantee funds.