Ooni Koda
  1. Home
  2. /
  3. Newsfeed
  4. /
  5. Real Estate: Residential sales market will go through...

Real Estate: Residential sales market will go through a period of stagnation and correction

May 26, 2022

* 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.  

The text of this article has been partially taken from the publication:
ActMedia
Read in full - click here
East European Comic Con, between 26&28 August, in Bucharest, with Ross Marquand as first guest

  East European Comic Con, the 10th edition, the largest event in Eastern Europe dedicated to film, series, comics, video games enthusiasts, will take place between August 26-28 in the Romexpo complex of Bucharest, informs a press release.Actor Ross Marquand, known for both his role as Aaron in the The Walking Dead series and for […]

Romania, at Madrid Book Fair: Romanian titles, translated into Spanish, recitals, debates, translation workshops

Romania is taking part in the Book Fair in Madrid, between the period of May 27 - June 12, in Retiro Park, with its own stand and a program that includes book presentations, recitals, debates, translation workshops and autograph sessions.According to a press release sent by the Romanian Cultural Institute (ICR), Romania's stand will have […]

CCIB signs Memorandum of Understanding with CCIA Tripoli

The Bucharest Chamber of Commerce and Industry (CCIB) signed a Memorandum of Understanding with CCIA Tripoli, in the presence of members of the Libyan delegation and representatives of Romanian companies interested in the respective market, informs a press release sent on Thursday."The event took place on the sidelines of a visit to Romania on May […]

EPPO: 15 searches in Romania in an investigation on fraud with European funds for the Danube Delta

Fifteen locations in Bucharest, Gorj, Giurgiu and the Danube Delta area were searched on May 24 upon the request of the European Public Prosecutor's Office (EPPO), as part of an investigation on supposed frauds with European funds with prejudices of over 3 million euros, a press release of the European institution informs.   EPPO suspects three […]

CFA Romania analysts estimate 2.3pct economic growth this year

CFA Romania analysts estimate an economic growth of 2.3pct this year, down from previous forecasts, according to a press release of the organization sent on Thursday."Against the background of the risk aversion triggered by Russia's invasion of Ukraine, as well as high inflation, the anticipation component of the CFA Romania's macroeconomic confidence indicator continued to […]

DefMin Dincu: Romania supports U.S. involvement in joint efforts for European defence consolidation

Romania supports the involvement of the United States of America in the joint efforts aimed at consolidating European defence, Romanian Defence Minister Vasile Dincu said on Thursday, at the U.S. Embassy in Bucharest at an event marking Memorial Day."We are in a turning point of history, in a turbulent and unpredictable security context, when a […]