Real Estate: Residential market slows but remains resilient; Bucharest recovers much of weak start this year

  Romania's residential property market slowed in the first half of the year after several years of strong growth, but the data do not point to a major correction, according to Colliers' first-half report released last week.Bucharest recovered much of its weak start to the year, ending the first six months with only around 2% fewer apartment transactions than in the same period of 2025.Nationwide, sales fell by around 9%, but the market remains above pre-pandemic levels, the report shows.'High inflation, expensive borrowing and pressure on household budgets are making buyers more attentive to price, the total cost of housing and the quality of projects, while the supply of new homes remains limited,' real estate experts say.Differences between major cities are becoming increasingly clear. In the first six months, apartment transactions fell by around 16% in Cluj-Napoca and 11% in Iasi, while Timisoara recorded an increase of around 3%.The supply of new homes remains one of the market's main constraints. In 2025, around 59,000 homes were delivered nationwide, the lowest level since 2017, and no significant increase is expected in the short term.Bucharest is, however, showing more positive signals for the coming years: the authorised floor area for residential buildings increased 3.6-fold in the first five months of 2026, the fastest pace in the past five years.At the same time, construction-site activity remains high. The volume of work on residential buildings increased by around 16% in the first five months of the year, the fastest growth among the main construction segments.Construction costs, however, remain a significant source of pressure. The prices of several materials resumed their upward trend in 2026, with some approaching record levels. Against this backdrop, developers are planning projects over longer cycles and adjusting their schedules based on how they expect the market to look two to three years from now.Interest in buying a home remains at a healthy level, and the Eurostat indicator measuring intentions to buy or build a home is still well above pre-pandemic levels (...) but buyers are more cautious.Developers, meanwhile, continue to look for opportunities. Interest remains high both from existing players and from new companies considering entering the local market, including through the acquisition of land or projects already at an advanced stage of the permitting process.According to the report, one factor supporting demand is the resilience of the labour market. Between the peak in March 2025 and May 2026, the number of employees fell by around 70,000, equivalent to just 1.3% of the total. By comparison, between 2008 and 2010, the economy lost more than 700,000 jobs.At the same time, despite inflation in recent years, the purchasing power of the average real wage is still almost twice as high as in 2015.Affordability, however, has not improved significantly. House prices have generally risen more slowly than inflation, but wages have followed a similar trajectory. As a result, the ratio between income and housing costs has not changed enough to make buying a home significantly easier, but neither has it deteriorated to an extent that would trigger a major correction, especially after a decade in which the purchasing power of the average wage has nearly doubled, the experts explain.Limited supply continues to support prices. In mid-summer, asking prices in Bucharest were around 9% higher than a year earlier, with a similar trend nationwide.Prospects for a stronger recovery in lending have weakened compared with the beginning of the year. With inflation still close to double digits in mid-2026, the National Bank of Romania is expected to keep its key interest rate at 6.50% through 2027.The economic backdrop also points to a slow recovery. Colliers estimates that GDP will decline by around 0.7% in 2026, compared with its forecast at the beginning of the year for growth of nearly 1%.Romania has one of the highest overcrowding rates in the European Union, while major cities need new, energy-efficient and well-connected housing. Limited supply, permitting difficulties in recent years and pent-up demand could continue to support prices for well-located projects.