real estate marketapartment pricesthe residential marketreal estate
Some talk about an imminent collapse of prices on the domestic residential market, arguing that the banks have tightened lending conditions, which will lead to a decrease in interest in purchases. However, what is happening now is completely different.
An analysis recently published by Colliers experts shows that the residential market started 2024 strong, with a first quarter ending with an 18% increase in the number of transactions with apartments in Bucharest, compared to the same period of the previous year.
Also within the same analysis, it is specified that, in the rest of the country, the demand for the residential market marked even higher increases, of 19%. The intention to buy remains high, observe the Colliers consultants, explaining that the relaxation of the financial markets will stimulate the demand for housing. In cities or areas with fewer houses under construction in the next period, this will exert pressure on prices. However, at least in the first part of this year, Colliers consultants anticipate a balance between demand and supply on the residential market.
“Although the month of March did not continue the trend of the record years for sales recorded in 2021-2022, the market does not yet support a significant acceleration in the number of transactions, especially as financing costs remain high. In the context where inflation is falling more slowly than it was provided in the official forecasts, we anticipate that a more significant decrease in the interest rate, compared to the level slightly below 6% currently registered, will most likely be observed at the beginning of next year.
If there will be no new major shocks that will affect the demand for apartments in the next period, we expect that the large fluctuations from one month to the next, specific to the years after the pandemic, will gradually be replaced by more moderate and predictable variations”, points out Gabriel Blanita, Associate Director Valuation & Advisory Services at Colliers Romania.
The growing demand will put pressure on house prices, real estate sector analysts warn
“Although a decrease in the number of homes delivered both this year and next year is forecast in Bucharest, where the level of sales in the first three months was approximately 18% higher than in the similar period of 2023, the demand advance will exert pressure on prices in the medium term.
Among the big cities, the most important sales increases were recorded in Timisoara (24%).
However, the main factor that influenced this evolution is the base effect, in the context where in the previous year, the sales in the first two months were extremely low, against the background of the increase in financing costs”according to experts.
“If we strictly analyze the number of transactions and compare the beginning of 2024 with the record years, we observe a 15% decrease, while, compared to the 2017-2019 period, we note a 20% increase. One of the reasons why we do not do much often compared to the years before the pandemic is that many changes have occurred since then.
For example, over 400,000 houses were built in Romania in the last 6 years, and a growing stock of houses would translate into an increase in the number of transactions. In addition, the average net salary at the national level has doubled in the last 6 years, and the GDP in the same period has increased by almost 70%.
Apartment prices did not remain unchanged, but increased considerably in the big cities, especially in the case of new constructions. The adoption of nZEB standards increases even more the cost of new constructions, and all these aspects make it increasingly difficult to compare between different periods. We have an increasingly complex residential market and it is important to look at both the backward-looking indicators, such as the number of transactions, prices, accessibility ratio, stock, deliveries, etc., as well as the forward-looking indicators , such as the authorizations issued, credit applications, purchase intent”, concludes Gabriel Blanita.
Senior Editor Manager.ro
Tags: prices increase due increasing demand
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