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Upswing on the Property Market

par LS Group Immo on 28 mai 2014
Upswing on the Property Market
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According to analysts, the economy is flourishing. As a matter of fact, our economy has changed considerably and has recovered from the crisis that affected the country up to 2000.
One of the resulting consequences of this favourable situation is a slight upturn on the real estate market. Many villages have reassigned former agricultural land to permit new constructions. And, as the saying goes, when property is booming, so is everything else!
Furthermore, having greater buying power, quite a few tenants have elected to become property owners. Facilities in terms of capital, investment by the second pillar (old-age pension fund), relatively attractive mortgage rates, first mortgages are among the criteria that play a part in the high demand ofpotential home buyers.
The market has changed; becoming a seller’s market rather than a buyer’s. In other words, the seller now has the advantage. Why? There are more people looking to buy compared to the number of homes available on the market.
The direct consequences: a hike in market prices; the emergence of speculators; property owners becoming quite rapacious, etc.
In the 80’s, the real estate market had literally exploded due to exaggerated prices and hastily-granted mortgage loans. A significant number of owners were unable to meet their mortgage payments and went bankrupt. The main losers of this past era were not only the property owners but also the banks which had to recuperate these overpriced properties and resell them in a manner calculated to avoid losing money.
Although the current situation coincides on certain points with this difficult period, safeguards have since been put in place. In fact, the estimation of the sale price of a house is now controlled in order to protect the future buyer as well as the banks themselves.
In short, an owner can no longer name just any price when selling his property. Even if the price is excessive and a buyer finds the house to his liking and wants to purchase it, the bank granting the mortgage loan would present a relatively precise estimation of the price of the house.
If it is found that the price is inflated, the buyer will be granted a mortgage credit under the condition that he pays, not the usual 20% capital, but up to 40%.
If the banker recognises that the buyer is unable to finance that much capital, he could simply dissuade the buyer from purchasing.

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