VAT and single tax hike, the pallbearer of the real estate industry

If the Government decides to raise the single tax to 20% and VAT to 25%, the new housing stock will become unaffordable for most Romanians, and put a crimp on developers’ construction plans, so the Government’s decision will be the pallbearer for the real estate market's death.

“Tax increase, and hence the drop in personal finance, will reduce household saving rate and the chances of getting a home loan accordingly. Also, for construction companies, the measure will lead to a cost increase and the offer in the residential market will be highly uncompetitive in terms of prices”, Adrian Crivii (photo) wrote on Darian blog.

The head of Darian says the gap between the demand and supply will keep dealmaking on standby and deepen the real estate crisis. In these circumstances, the balance between supply and demand would be narrowly sustained and only for the old apartments where prices will drop further and steeper.

“In these circumstances new housing supply will become unaffordable for most Romanians, especially with the current rates, and prospects for new developments will be practically null. So I could say that a VAT and single tax hike will be the pallbearer for the real estate market's death”, said Crivii.


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