The Croatian government will subsidise apartment purchases through two models - by paying half of loan instalments over the next four years for loans of up to 100,000 euros repayable at an interest rate of up to 4.95 per cent, and through government guarantees for people who are laid off from work this year, in which case the government will pay the loan interest for a maximum of one year, according to a bill on government subsidies and guarantees for housing loans.
The government on Thursday introduced the bill into Parliament for adoption under fast-track procedure. The government estimated that subsidies could help sell about 1,900 newly-built apartments over the next two years.
Eligible for government subsidies will be buyers of newly-built apartments whose price does not exceed 1,900 euros per square metre. They will be granted subsidies for a loan of up to 100,000 euros repayable over a minimum of 20 years.
For a housing loan of about 100,000 euros, the government will provide 14,000 euros, or 8% of the total, Prime Minister Jadranka Kosor said.
Kosor said that the government and bankers agreed at a meeting on Wednesday on a reduction of interest rates, so that the effective interest rate for government-subsidised housing loans would be 4.95 per cent.
Construction Minister Branko Bacic said that the government had earmarked 28 million kuna in the budget for subsidising apartment purchases this year. Should there be more applications, those with lower loans would be given the priority, he added.
According to the Construction Ministry, between 10,000 and 13,000 newly-built apartments are unsold. Bacic said he expected that the bill would boost the sale of apartments and initiate an investment cycle in housing construction.
The government today also endorsed an operational plan aimed at encouraging small and medium enterprises, earmarking 407 million kuna for that purpose this year.
