* Tougher lending conditions, inflation, rising construction costs and the conflict in Ukraine are the four major factors influencing the evolution of the residential market. If after the first year of the pandemic the optimism in the residential real estate market had returned to pre-crisis levels, today this sector faces new challenges that may generate structural changes, which may have different implications for sales segments and rental. There is already a much faster growth trend in the rental area compared to sales. The real estate market is going through a period in which its evolution is dependent and, at the same time, strongly influenced by the changes that take place in the economy, but also at the geopolitical level. JLL Romania specialists took into account four key factors that are currently influencing the evolution of the residential market, namely harsher lending conditions, inflation, rising construction costs and the conflict in Ukraine and made a series of projections on what could happen in the medium and long term in this market. Given the tightening of lending conditions by the rapid rise in interest rates on loans, experts expect changes in consumer behavior. Potential buyers will look more closely at the possibility of making major purchases and the pressure this may have on your personal budget. Thus, the accessibility of the purchase of such properties will be affected. In addition, banks have become more reluctant to lend and pay more attention to assessing the prospects of an individual or family interested in obtaining a loan, as well as the actual price of the construction. A simple calculation made by JLL experts shows how the increase in interest rates evolved in the first quarter compared to the same period last year. Thus, for an apartment whose price had a value of 100,000 euros + 19% VAT in Q1 2021, the monthly rate was 2,255 lei, at an advance of 15% and a monetary policy rate of 1.25%. In the first quarter of 2022, for the same price of the apartment, respectively 100,000 euros + 5% VAT, the monthly rate amounts to 2,471 lei, which means an increase of 8% compared to Q1 2021, given that we do not take into account the increase market prices, and the monetary policy rate reached 3%. If we take into account the increase in market prices, the monthly rate reaches 2,718 lei, +17% compared to last year. In terms of inflation, the latest report from the National Institute of Statistics shows that the annual inflation rate in April 2022 was 13.8%. Since the beginning of the year, the increase is almost 8%. The upward trend is also observed in the EU Member States, with the annual inflation rate in April 2022 compared to April 2021 calculated on the basis of the Harmonized Index of Consumer Prices (HICP) being 11.7%. Rising inflation is affecting the price of building materials, which is having repercussions on the housing market. According to the National Institute of Statistics, the construction cost index for residential buildings was 135.6 in January 2021 and 163.4 in January 2022, up 20% in one year. This value measures the evolution of the costs incurred in the construction works carried out in a certain period compared to a reference period. The main items of expenditure are: the value of construction materials; labor or gross monthly earnings; equipment and expenses for own or rented equipment; the costs of transporting the material from the manufacturer to the construction site; indirect costs (staff salaries, supply, storage, rents, energy, office supplies, communications). This year, a new risk has arisen in the real estate market, namely the conflict in Ukraine. In addition to the psychological impact, the war also influenced the dynamics of transactions, our country being on the border with a conflict zone, and the investment in the purchase of a house is now being analyzed in terms of security. On the other hand, the conflict has increased the demand for rental housing at a considerable rate.
Two Romanians were arrested during Sunday night, May 11, after robbing empty houses in the evacuated mountain village of Brienz located in the Swiss canton of Graubünden. The village had been evacuated since November due to rock falls. The locality was, however, monitored by the authorities to prevent break-ins. The would-be thieves apparently tried to […]
The European Bank for Reconstruction and Development, or EBRD, has revised its estimates regarding the evolution of the Romanian economy in 2025 downward to 1.6%. The bank expects Romania’s GDP to grow 0.2% less than the 1.8% estimate made in February, and to increase by 2.4% in 2026. Romania's GDP growth slowed to 0.8% in […]
During a meeting on Monday, May 12, the Cluj-Napoca Local Council approved a draft resolution that imposes smoking restrictions in several public spaces in the city, including public transport stations, parks, and sports facilities. The resolution was adopted with 22 votes in favor and 3 abstentions, and will come into effect 90 days from the […]
An internal survey by Romanian Business Leaders, which does not have national representativeness but was answered by 417 entrepreneurs, shows that 62% of entrepreneurs expect to have to make layoffs, while a third expect the number of employees to remain the same. The expected layoffs are directly connected to the possibility of Romania choosing a […]
Romanian Istvan Kovacs will be the main referee for the UEFA Champions League final between Paris St-Germain and Inter Milan, which will be played on May 31 in Munich. The match will be Kovacs’ third European final in the last 4 years. The 40-year-old referee has previously officiated the UEFA Europa Conference League final in […]
Over 70 museums across Romania will open their doors after hours for the 21st edition of Night of Museums, one of the country's most anticipated cultural events. Held on the night of May 17, the event offers visitors a unique opportunity to explore exhibitions, installations, and creative activities in an unconventional, late-night setting. From major […]
