2018 housing market outlook cool

The Romanian residential market seems to have stumbled in 2018. Even if at first sight things seem okay, as you get closer, cracks appear. The volume of residential construction works fell by 24.8 percent in H1, according to the INS, the ROBOR is above 3 percent from less than 1 percent last year, and even demand is down 5 percent, imobiliare.ro said.

It might not be a crisis like in 2007-2008, but pundits predict a shock. There have been mixed signals. If the number of delivered homes drops, because of a lack of workforce, in theory, the strong demand will cause an increase in prices. But demand has slowed, largely because the increased ROBOR level has raised the cost of repayments, according to Business-Review.eu.

Demand for homes is lower than last year in Constanta (-15 percent), Bucharest (-8 percent) and Brasov (-4 percent).

“These decreases can be attributed to the increased influence of what happens in the lending field: while last year many Romanians rushed to access Prima Casa loans, in the first half of the year, due to limited funds, and the sustained growth of the ROBOR index, some potential buyers preferred to postpone the purchase decision,” said Adrian Erimescu, CEO of imobiliare.ro.

Falling demand is not expected to completely offset the drop in the number of homes delivered on the market, but it will have a buffer effect and cool the market, which has become overheated in some areas, especially in Cluj-Napoca.

“Under current market conditions, we expect young people and first-time buyers to suffer most from the rising credit conditions and declining supply of residential property. Some potential buyers will postpone their decision and rent instead of buying – the more so as purchase prices have so far grown faster than rents in both Bucharest and the other big cities. Meanwhile, some owners will decide to withdraw from the sale and lease of properties,” said Dorel Nita, head of data and research at Imobiliare.ro.

 

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