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Oct 17, 2007 17:41 EEST
October 17 (SeeNews) - The housing mortgage market in south-eastern Europe (SEE) has the potential to grow by an annual 24% in the 2007-2009 period, Italian banking group UniCredit said on Wednesday, as increased prosperity boosts demand.
“Rising demand backed by further increases in income level, search for improving quality and increasing value of real estate will continue to boost mortgage financing, accounting for one-third of new flows expected in the SEE region in 2007-2009,” it said in its latest Households Financial Behaviour, Housing Market and Credit in SEE report.
The SEE region includes Bulgaria, Romania, Croatia, Bosnia & Herzegovina and Serbia.
Gross domestic product (GDP) growth in SEE is well above European Union levels. The GDP growth in the region is expected to reach 5.9% this year, UniCredit said.
Banking loans represent the main source of financing for new residential property investment. While the penetration in Croatia has already outpaced that in CEE (central and eastern Europe) countries, mortgage lending in the other SEE countries started only some years ago.
According to Unicredit’s survey data, there is potential for new housing construction and renovation, mostly as primary housing, but there is also demand for investment or secondary housing.
Although, home ownership rates are comparably high, especially in SEE countries, the pre-1990 house building legacy has left unique housing stocks in SEE of relatively young, but often rundown homes with limited internal and neighbourhood amenities and poor insulation. Dwellings size are also smaller than in the rest of the region, with an average of 2.7 rooms and 60 square metres of living space.
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