The year 2016 is drawing to a close, and as in every field, it is time for analysis. For the real estate market, 2016 was a good year, especially for the new housing segment, according to industry specialists.
After many years, clients are interested in purchasing homes as early as the project stage. This indicates greater confidence in the real estate market.
We have spoken with several real estate experts and present their views on 2016. How was 2016 for the Romanian real estate market?
2016 continued the upward trend of recent years, particularly in the new apartment segment. We noticed more interest in new residential complexes under construction, and the higher demand for these types of apartments and concluded transactions confirm that the trend remains positive – Cristian Marinoiu, Sales Manager VanzariDezvoltator.ro
It was one of the best years so far; the market stabilized, real estate investors began to reappear, and developers started looking for new land for future real estate projects. 2016 also receives a positive mark in terms of real estate developments, as new residential projects emerged and existing ones were delivered – Lucian Olariu, owner Olimob.
There are investors still waiting to see where the real estate market is heading, but there are also investors who started projects for both houses/villas and apartment blocks (in the first half of the year) with great success in terms of transactions. In the second half of the year, some were contracted even from the project phase – Cristina Pavel, owner Pavel Imobiliare.
2016 was an atypical year, with better periods and less favorable ones; there was no linearity in trading. An important factor in these uncertainties, which generated real estate market stagnations, was the approval of the debt discharge law (darea in plata), a law that generated major changes in acquisition lending. The suspension of the First Home (Prima Casa) program also generated significant real estate blockages, especially in the affordable housing segment – Claudiu Hategan, broker/owner Klauss & Partners
New homes, the stars of the real estate market in 2016
The share of new homes was over 70% of total transactions. The most sought-after were homes with prices between 50,000 euros and 80,000 euros located near parks, metro stations, or shopping centers.
• 40% of clients bought through the First Home program
• 30% contracted a classic mortgage loan
• 30% of buyers had cash
Old homes are no longer as sought after, with the exception of a few restricted areas in Bucharest where there are no offers in buildings constructed in recent years, and old blocks are considered acceptable because they were built in the late ’90s. An example is the Aviatiei neighborhood.
“The market for homes priced between 200,000 and 400,000 euros in the North also had an interesting dynamic because it addresses middle-class clients who purchased with cash. The low interest rates offered by banks prompted clients to invest their money in properties which they subsequently rented out, obtaining a yield superior to bank interest rates. Also for rental purposes, old houses with exceptional architecture were bought, with prices ranging between 500,000 and 1,000,000 euros,” Nistor Bocaneala, owner 195.ro Imobiliare, told IMOPEDIA.ro.
What was the price dynamic?
Prices recorded a small increase, primarily due to new projects being developed and secondly due to the shrinking stock of old apartments. On the rental side, the beginning of the year brought a slight increase, after which, at the end of the year, prices returned to the levels seen at the start of the year – Lucian Olariu, owner Olimob.
Against the backdrop of high demand for central and ultra-central areas, prices have a slight upward trend for this year-end. Thus, clients pay a price of approximately 1,500 euro/sqm for central areas, while for an ultra-central positioning, prices range between 1,800 – 2,200 euro/sqm – Cristian Marinoiu, Sales Manager VanzariDezvoltator.ro.
At the end of September, the average asking price for an old apartment in the North area was 1,100 – 1,200 euro/sqm, compared to 1,300 – 1,500 euro/sqm useful area for a new housing unit – Cristina Pavel, owner Pavel Imobiliare.
Old buildings remain an option for clients
Old buildings can remain stars of the real estate market as long as they meet two basic conditions: they have a very good location, and the asking price is fair in relation to the offered surface, location, facilities, etc.
How did the rental market perform?
The rental market entered a shadow in 2016, with demand dropping sharply. Prices stagnated, and landlords learned how to keep their tenants, so 2016 did not bring as many relocations.
“The majority of tenants I met this year were either looking to upgrade their home in terms of the number of rooms or were moving into a rental for the first time; very few were changing homes for price reasons or an unfair relationship with the landlords,” explains Claudiu Hategan, broker/owner Klauss & Partners.
2017 comes with price increases
“We can say after an analysis of 2016 that the market is in a slight growth and that the end of this year is a good time for buying and renting because 2017 may bring an increase in prices,” claims Cristina Pavel.
Source: Imopedia/Media
Frequently Asked Questions
What was the most popular real estate segment in 2016?
New residential developments were the market leaders, accounting for over 70% of total transactions, driven by high demand for units priced between €50,000 and €80,000.
How did buyers finance their property purchases in 2016?
Financing was split between the “First Home” (Prima Casa) program (40%), classic mortgage loans (30%), and cash payments (30%).
What were the average prices for central properties in Bucharest?
In central areas, prices averaged around €1,500 per square meter, while ultra-central locations saw prices ranging from €1,800 to €2,200 per square meter.