Romania – the most affordable Eastern European country to buy houses, but where utility bills and daily expenses are the hardest to pay

Romania has the most affordable housing prices in the eastern half of Europe, compared to the average net monthly salary. At the same time, however, it ranks last in the European Union in terms of the ease with which residents pay utility bills and cover their usual expenses for food, dining out or buying goods.

“In the current context of the real estate market in Romania, there is a significant discrepancy between affordable housing prices and the significant costs of utilities and daily expenses. This difference underlines the fact that, compared to other European countries, purchasing a property in Romania is more affordable.

It is also observed that the percentage of purchases made with the help of bank loans in our country is considerably lower compared to other European states, which indicates a higher degree of accessibility on the real estate market in Romania, especially through the lens of the large number of owners from our country.

If we analyze the salaries of other countries in the European Union, only in Bulgaria the average net salary is lower than in Romania, standing at 861 euros per month. However, Romania remains among the most affordable countries in the European Union when it comes to purchasing housing”, says Răzvan Ceapă, Head of Operations Storia & OLX Imobiliare.

Romania has the most affordable real estate prices in Eastern Europe

With an average net salary of approximately 977 euros per month and an average price of approximately 1,409 euros per square meter for housing located outside the central areas of the urban environment, Romania is in the middle of the ranking of the top countries in the European Union from the perspective the degree of affordability when buying a home.

Thus, the affordability index for the real estate market in Romania, calculated as the ratio between the average price per square meter for a residential home according to the Numbeo platform and the average net monthly salary according to the National Institute of Statistics, is 1.44, given that a home it is more accessible the lower the value of the index.

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Relative to average incomes and real estate prices in the other 26 states of the European Union, housing in Romania is the most affordable in the eastern half of the continent, on a par with Bulgaria (1.44) and ahead of Hungary (1.86). Most countries in the eastern half of Europe have an index close to 2, as is the case for Slovenia, Greece or Croatia, with higher values ​​for the Czech Republic (2.15) and Poland (2.18) and a record of 2, 55 in the case of Slovakia.

Also, it is easier for employees in Romania to buy a home compared to employees in the main European economies such as Germany (1.72) and France (1.81). At the opposite pole, relative to average net wages, the most affordable housing in Europe is in Nordic countries such as Denmark (0.91) and Sweden (1.05).

On the other hand, Bucharest is among the most affordable capitals in the European Union for the purchase of housing, when the average net salaries and the average price per square meter in the capitals are taken into account. Thus, the capital of Romania ranks 6th out of 27 in the European Union in this respect, with an accessibility index of 1.5, and the only capitals more accessible for real estate are Madrid (index 1.08), Brussels (1.23), Nicosia (1.25), Riga (1.35) and Sofia (1.45). At the opposite pole are Prague (2.9), Valletta (2.98) and Paris, which is also the only capital with an index higher than 3, i.e. 3.04.

One of the explanations why Bucharest is more accessible at the level of European capitals compared to Romania at the level of other states is that in the countries of western and northern Europe the income discrepancy between the capital and other cities is smaller than in the case of Romania.
Romania, among the last countries in the ease of paying utilities

Meanwhile, Romania ranks only 20 out of 27 in the European Union on the accessibility index for paying utility bills, based on estimated costs for electricity, natural gas, drinking water or household waste, as reported by the Numbeo platform, for a apartment of 85 square meters.

Thus, in the case of an apartment, utility costs in Romania reach the equivalent of around 134 euros per month, corresponding to an affordability index of 0.14 when the average net salary of 977 euros is taken into account.

One of the explanations for this positioning is that Romania has the third highest price for electricity in the European Union (0.42 EUR/kWh) and the sixth highest price for natural gas (0.14 EUR/kWh), according to official data reported by Eurostat for the first half of 2023.

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On the other hand, also in this case it can be seen that Romania has a better or close accessibility index compared to the Eastern European states: if Bulgaria and Hungary are slightly better with a very close index (0.12), in countries such as Slovenia, the Czech Republic, Poland, Greece or Slovakia utility bills are more difficult to pay.

At the opposite pole, residents of Sweden, Denmark and Finland pay their bills the easiest and have an affordability index of 0.3 – 0.5, while the continent’s big economies such as Germany, France or Italy are in the middle of the ranking with an index of 0.7 – 0.11.

Romania, among the most expensive European countries for consumer goods

In the case of usual expenses, which include the costs of local transport, food bought in hypermarkets, restaurant meals or occasional expenses for buying clothes and shoes, Romania ranks only 23 out of 27 in the European Union.

According to data from the Numbeo platform, the usual costs reach the equivalent of 585 euros per month for a person living alone, so the affordability index compared to the average net salary of 977 euros is 0.6. One of the explanations is that Romania currently has the highest inflation in the European Union (7.1%), compared to the average of 2.8% in the EU and 2.6% in the Eurozone, according to the latest Eurostat report.

Thus, Romania offers lower usual costs relative to salary only compared to several states in the region: Bulgaria (0.68), Slovakia (0.68), Latvia (0.7) and Greece (0.73).

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The Nordic countries are at the top of the bloc in this respect as well, with accessibility indices of 0.26 for Denmark and Luxembourg and 0.29 for Ireland. The main European economies are somewhere in the second quarter of the group of 27 member states, with indices of 0.35 for Germany, 0.38 for France or 0.49 for Italy.

In specific categories, Romania ranks only 24th out of 27 in the affordability index for spending at the hypermarket for a month with an index of 0.2, equal to Latvia, while the only countries in the European Union that have a weaker index are Slovakia (0.23), Greece (0.24) and Bulgaria (0.25).

At the opposite pole, the lowest hypermarket shopping costs relative to average net wages are for residents of Ireland, Denmark (both 0.08), the Netherlands and Luxembourg (both 0.1), mainly due to the fact that average net wages in these countries are among the largest in the European Union.

In the case of a restaurant meal with main course, side course and dessert for one person, Romania fares a bit better and ranks 19 out of 27, with an affordability index of 0.02, better compared to countries in the region such as Hungary, Bulgaria and Croatia (0.021) or Greece (0.023).

Meanwhile, residents of Luxembourg and Austria find it easiest to eat out cost-wise (0.01), followed closely by residents of the Netherlands and Germany (0.011). The reason is largely the same: high incomes relative to restaurant prices.

In conclusion, the data show that Romania currently benefits from the most affordable real estate market in the eastern half of Europe, despite the fact that the only country where the average net salary is lower than in our country is Bulgaria (861 euros). In contrast, utilities and usual costs are among the highest in Europe relative to the average salary, as a result of the fact that Romania has among the highest electricity and natural gas prices and the highest inflation in the European Union.