The economy went bad over the past several months in so many countries, and the real estate market followed the trend. How not to be like that, when less and less people qualify nowadays to get a personal loan or a mortgage for a home or a land plot?
USA was the first to be affected by this blockage of the lending mechanism, when so many people went bankrupt and were not able to pay their debt anymore.
One after the other, real estate markets in Europe started to collapse. UK, Spain, Italy, Romania, Bulgaria, Hungary, all these countries experienced a drop in the prices for old apartments, which if I may say, were far too exaggerated.
People who thought that developing real estate properties was the future of getting rich, saw their dream s going down the tube, as they can hardly sell any of those new residences built for the profit.
When there's no loan to take, very few persons can acquire expensive properties such as apartments or villas, as salaries are definitely not enough for such purchases.
However, if somebody gives you credit and you can't afford it, you'll get in impossibility of paying it back and get in trouble. Not repaying your debt means the bank takes your assets to sell them. But now they are worth less than the amount you've taken.
Here's the trouble, that a real estate agent will have a hard time to find customers that are eligible to get a mortgage for their future residence.
In Romania, the government has initiated a program, Prima Casa, meant to grant up to $60000 Euro for people who don't own a home and want to go for a mortgage and buy one. If they don't pay, banks would get their money back from the government.
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