Romanian residential market in "categorically downward" trend over summer
The Romanian residential real estate market continues its slight downward trend started in June of this year, with apartment prices dropping both at the national level and the big cities.
The prices per square meter reached EUR 1,722 in July, EUR 23 lower relative to the previous month, but still EUR 244 more than a year ago, according to the Romanian Economic Monitor, a research project run by the Babeș-Bolyai University which compiles real estate data.
Data also shows that real estate prices in big cities, which had been increasing since March 2020, have also dropped between May and June of this year. Such was the case in Romania's largest cities: Bucharest, Cluj-Napoca and Constanța.
"The sharp increase in reference interest rates, especially ROBOR, far above the increase in the [National Bank of Romania] BNR's monetary policy rate, is the main factor that caused a decrease in real estate demand," Nagy Bálint Zsolt, a member of the Romanian Economic Monitor team, told Economedia.ro. He also added that summer is traditionally a quiet period on the real estate market.
Zsolt also said that almost 60% of the transactions are carried out in cash, without a mortgage, indicating that people still have reserves.
"On the other hand, the inflation rate seems to have reached a ceiling, and if disinflation occurs, then automatically the interest rates also enter the downward slope, which means that demand on the real estate market could recover," he added.
In the second quarter of the current year, residential properties in Romania appreciated by 4.6% compared to the previous three months, reaching an annual growth rate of 14.3%.
The residential market has been on an upward trend since 2015, with prices increasing by about 83%. The average transaction price of housing exceeded EUR 100,000 in the first half of this year, registering an increase of approximately 10% compared to the same period last year, according to data from RE/MAX Romania, one of the top real estate consultancy firms in the retail segment.
The most property sales in July 2022 were recorded in Bucharest (11,370), Ilfov (3,417), and Cluj (2,923).
The number of mortgages, at the national level, in July 2022 was 23,656, 15% lower than in July 2021, most of them in Bucharest, Brăila and Ilfov.
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