Hindrek Leppsalu, Managing Director of Ober-Haus Real Estate, told Äripäev Online that less favourable terms will erode the customers purchasing power and make it more difficult to find clients for real estate developments.

 

Leppsalu said that, until now, clients have been able to enjoy self-financing requirement of only 10 percent thanks to Kredex, a loan guarantee fund. Without Kredex, lenders require 30 percent self-financing.

 

"If the percentage would return to 30 it would mean that EEK 100,000 in own funds will give you housing that is worth not a million kroons like before, but only a third of it," said Leppsalu.

 

Leppsalu admitted that such a development would affect the real estate business of Ober-Haus.

He added that the governments plans to toughen borrowing requirements to dampen consumption is in conflict with the government policy to promote private housing.

 

"Even in tough times, real estate loans have not gone sour," said Leppsalu, adding that the important thing is that housing loans are meant to improve a persons wellbeing. "These are not luxury items - most Estonians do not live in palaces made of granite, with marble floors and stairs made of rare wood."