Romanian residential sales market will go through a period of stagnation and correction

Romanian real estate market is going through a period in which its evolution is dependent and strongly influenced by the changes that take place in the economy, but also at the geopolitical level, JLL shows.

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 suffer.

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.

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.

If we take into account the increase in market prices, the monthly rate reaches 2,718 lei, +17% compared to last year.

Rising inflation is affecting the price of building materials

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 being 11.7%.

Rising inflation is affecting the price of building materials, which is having repercussions on the housing market.

Thus, 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.

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