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Government support for housing markets varies across the EU

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Smaller countries and new EU members generally tend to have less effective support measures for the housing market, compared to the biggest economies and old EU members, according to a recent Deloitte conducted within the 27 EU countries, Residential Development: The role of government in EU real estate markets.
The survey looked into how national governments support the housing market for individuals through tax measures and mortgage guarantee funds. Historically, residential development experiences a very difficult time during an economic recession. This makes government support for housing even more important as demand for housing directly affects residential development. This sector is closely linked to the construction industry, which is a sector with one of the highest multiplier effects throughout the economy and on employment levels. This fact is important for finding ways to overcome the financial crisis and should be considered carefully by governments in the region.  
According to the report, the majority of EU27 countries have established more measures to support housing. In the group of countries with four to five effective measures are the major economic powers of the EU with big populations – France, Germany, UK and Spain. Romania has been included in the group of countries with 0 – 1 effective measures, alongside Latvia, Slovakia and Ireland.  
“Players in the Romanian residential real estate market have long anticipated the heavy impact of the crisis in this specific sector; big brokerage companies chose to close down residential departments, while focusing efforts on segments with higher potential,” said Catherine Martin, Financial Advisory Director, Real Estate & Construction, Deloitte Romania. “Prices in the residential sector have been going down for nearly one year and a half now and most specialists do not expect a recovery until mid-year. Some signals on the market enable to think that banks are relaxing a bit their lending strategy. Government incentives would then be welcome to accompany a gradual start of recovery. While saluting the initiative of the First House program, the industry agrees that further support from the Government is needed.”  



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