Apartment prices remain unchanged despite falling demand

The sales of apartments have fallen significantly during the past few months. Ruslan Barladeanu, the president of the Board of “Locuinte pentru toti” (“Dwellings for Everyone”) building company, explains such a situation by the fact that 80% of the apartments are bought by the Moldovans that work abroad or from the money sent by them home. The world financial crisis left many people without jobs and made them change their opinion about how the money they earned should be spent, Info-Prim Neo reports. “The people do not venture to spend the 30,000-40,000 euros they earned through hard work on buying apartments. They prefer to keep the money as they are not sure what will happen tomorrow,” Barladeanu told the reporters. “If a year ago we had sold all the apartments in the block before the construction works were completed, now 5-10% of the apartments or even more remain without an owner,” he said. Among other effects of the financial crisis stressed by Barladeanu are the high rates of interest on loans and the suspension by banks of mortgage lending. “Though it is not said openly, the banks suspended mortgage lending and expect to see what will happen in December, January and later. They want to see if the people withdraw the money,” Ruslan Barladeanu said. According to him, the apartment prices have not gone down despite the falling demand. “An apartment or two could cost cheaper in some of the buildings and you would be lucky to find and purchase them. There are companies that are in a more difficult financial situation as they probably have to repay loans and resort to price reductions. Many things are done in despair, including sales at prices that are lower than the cost price,” Barladeanu said. The quoted source also said that no new construction projects have been recently launched and we could witness a shortage of apartments in 2010. During the last two years, new projects were initiated in the construction sector every month. Asked about the projects of “Locuinte pentru toti”, Barladeanu said that unfortunately, the apartments they build have not become accessible to everyone. “When we entered the market, we proposed that the state should create a mortgage company, for example from the money earned from privatization, which would encourage the construction of dwellings for middle income groups. All the countries have such a mechanism. Moldova yet expects remittances to sell the constructed apartments. It is very humiliating that the people that work their whole life and have salaries cannot afford to buy an apartment. We welcomed the government’ initiative to sell the Ministry of Defense’s plots of land and build apartments for military men from this money. But this was the only case,” Barladeanu said. The businessman also said that the workplaces in Moldova’s construction sector have not been reduced yet. But the building materials grow dearer. About 15 companies work in the house building sector on a permanent basis. Another 25 companies carry out by a project or two.