Real-Estate Market To Shrink in the Short Term - Study

Estimates of the real-estate market say the supply of homes will meet the demand in 32 years. In the mean time, a quarter of Romania's 20 million population plan to buy a new home in the next 10 years

Estimates of the real-estate market say the supply of homes will meet the demand in 32 years. In the mean time, a quarter of Romania's 20 million population plan to buy a new home in the next 10 years ; however, a only some 2% of Romanians have incomes allowing them to qualify to bank credits.


In absolute figures, a UniCredit Tiriac Bank study found that five million Romanians wanted to buy a new home during the next decade, but only 400,000 of them met the criteria for having a mortgage financed.
However, the bank study put the potential buyers at 10% of the population, or two million, half of which were under 29-year of age and deemed to have higher incomes in the future, which could allow them to finance a new home either from their own resources or from bank credits, said Rozalia Pal, head economist with the UniCredit Tiriac Bank.
Still, the prospects are not favorable. Pal said the number of people able to buy new homes may go down, as the purchasing power would, while the cost of financing and the risk associated with it will go up.


Most respondents in the study said they needed the new homes for their families, with only 12% of respondents deeming the purchase an investment opportunity. The latter are more advanced in their age, and have very high income.
Real-estate developers take into account that only people of higher income can buy new homes, hence the apartments they build in Bucharest, for instance, are 100 sqm big and higher.
Since 2000 the asking price for apartments went up four to five times. The home offer in Romania stays at seven units per 1,000 people, which is way under the European average.
The conclusion of the UniCredit Tiriac Bank analysis is that the real-estate market will slow down in the short term, but will pick up again in the medium term.