The government will continue the “New House” program in 2024, this year’s ceiling will be 1 billion lei. In addition to the statement of the Ministry of Finance, the reasons are also indicated in the explanatory note.

Noua Casa 2024 is available in lei for the purchase of a detached house and the maximum loan amount you can access is:

• 66,500 euros – for houses whose value does not exceed 70,000 euros, the requested advance is 5%;

• €119,000 – for houses priced up to €140,000, in which case the requested down payment is 15%.

Interest is variable, calculated according to the Consumer Credit Index (IRCC), to which is added a fixed margin of approximately 2%.

According to the Ministry of Finance, there are 3 reasons why the extension of the New House is needed

Below is the full explanatory note:

1. This segment of potential beneficiaries is represented mainly by young and very young people (aged 18 to 28) who do not have high enough incomes to be able to support the rapid process of accumulating an advance (in the case of standard mortgage loans, the level of the minimum requested advance is over 15% of the cost of a home purchased with a loan), are first-time homebuyers and tend to face greater difficulties in obtaining and maintaining a mortgage loan.

2. Another argument in support of ensuring the continuity of the “New House” Program is the inevitable increase from January 1, 2024 in the cost of purchasing new houses, the cost of which does not exceed 120,000 euros. given the increase in VAT from 5% to 9% for this housing segment.

3. In addition to the social arguments for the continuation of the Program, one should also take into account the general arguments drawn from the latest studies, which show that, despite the uncertainty that dominated the European economy in 2022 and 2023, under the conditions Russia’s aggression against Ukraine may affect on EU business in several ways, both directly and indirectly.

Consequences can be the interruption of existing contracts and projects, which can lead to a loss of turnover, disruption of supply chains, in particular raw materials and finished materials, or other factors of production that are no longer available or economically unavailable.

As a result, in most cases, the housing market has seen price increases due to the continued increase in construction costs, largely driven by higher electricity and gas prices, which has reduced the availability of financing.

Thus, to outline the overview of household lending in Romania, according to the Financial Stability Report prepared by the BNR on June 30, 2023, total household indebtedness continued to decrease on the date of the previous Report, namely December 2022, both after the increase in interest rates, but also strengthening lending standards.

We note that, according to the findings published in the report “Residential Real Estate Market T III 2023”, published on the website: imobiliare.ro, the period 2024-2025 is likely to bring lower interest rates, but together with higher prices for housing, on the one hand, in the first half of the year, the pressure that will arise due to the increase in VAT from 5% to 9% for newly purchased houses, the value of which is lower than 120,000 euros, then, if the inflationary trend is confirmed, a possible relaxation of lending, and all this is against the background of a decrease in supply.

These trends, which are estimated to manifest themselves from 2024, are likely to put further pressure on the growth of real estate prices, which determines the need for continued government support in the process of purchasing housing by individuals in order to avoid distortions. and failures to secure access to finance.