Tuesday, September 30, 2008

Popp, Impact: Apartment prices could fall by 16% if Government cancels VAT

The price of apartments could fall by 16% if the government cancelled the VAT, and by 5% if the private sector and the entrepreneurs reduced the profit margin by a third, said on Tuesday, Dan Ioan Popp, President of Impact Developer and Contractor.

Similarly, if the government and the local authorities invested in utilities and public services in the proximity of residential districts, the price would fall by 12%, and if they offered free land for the construction of housing, prices would drop by 10%, said Popp, at the conference "Romania Construct and Real Estate Forum 2008".

"A major contributor to the actual final price borne by the buyer customer should be added: the bank, by the financing costs. The annual interest rate, cut from 15 to 10%, applied to a credit for 20 years, reduces the total cost of the apartment by about 30%", said Popp, who added that there are sub-variants of involving those responsible for price reductions.

Thus, if the VAT were reduced to 5% and the collected amount were returned by the government to the constructors and developers, they could increase wages for construction workers and specialists by about 30%.

Also, apartment prices could fall if the government and the authorities redeemed or bought at market prices the investments in utilities, schools, kindergartens and dispensaries, made by developers in residential districts or bought from the market land plots to be supplied to the population or the developers, free of charge or at low prices, for the construction of apartments.
At the same time, prices could drop "if the Romanian state (...) begins to charge a intermediation / outsourcing fee from the state where the Romanian citizens emigrated, and now makes practically free use of the resources built on the public budget of Romanians" Popp continued.
In his opinion, the collected amounts should be used in areas where the biggest labour deficiencies are found, in order to keep the workers or to attract substitutes from rural areas, or immigrants.

"We believe that the world financial-banking crisis will determine a decrease in the share of investment in construction", says Popp.

By now, Impact Developer and Contractor has invested about 20 million euro in public utilities and units providing public services in over 20 housing ensembles.


source: http://www.curierulnational.ro/In%20brief/2008-10-01/Popp%2C+Impact%3A+Apartment+prices+could+fall+by+16%25+if+Government+cancels+VAT

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