A real estate crisis similar to US is unlikely in Romania

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The possibility of a financial crisis in the real estate sector in Romania is unlikely as the value of an apartment can be only partially covered by an average banking credit, said on April 16 Ion Dragulin, director of Financial Stability Division with National Bank of Romania (BNR).
 
"The fact that the value of an apartment can be only partially financed through an average banking credit, as statistics show in Bucharest, proves that a similar real estate crisis to US is unlikely in Romania," said the BNR official.
 
According to BNR data, some 12,000 contracts of mortgage credit have been concluded in Bucharest in 2007, with an average value of credits of 70,000 euros.
 
He said that the real estate leasing companies should pay increased attention to turbulences on the international markets as these companies finance themselves from abroad.
 
"The real estate demand will remain high in Romania due to the deficit of houses and offices.
 
There is also a forecast of stable economic growth, while revenues are also on the rise," said Dragulin.
 
He warned that the leasing is only little used to finance the real estate sector for the population.
 
"The non-banking financial institutions have an extremely low share in granting real estate credits for the population, only 1.23 percent of total, over 95 percent of these financings remaining in the banking sector," said Dragulin.
 
The representatives of the real estate leasing companies say that the low share of financing real estate credits is caused by the population’s mentality, but things will change in a few years.
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