Romanian Residential Market Report
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ROMANIAN RESIDENTIAL MARKET REPORT Q3-2019 CONTENTS 4 Market overview 5 Residential price index 7 Quarterly trend of the residential property prices 11 Price trends across main cities 11 Price trends across neighborhoods 24 Demand for residential properties for sale 27 Number of listings - for sale 29 Number of listings - for rent 30 Sale transactions 31 Transactions in main cities 37 Time on market 38 Negotiation margin 39 Construction of dwellings 42 About us LESS IS MORE OR HOW THE ROMANIAN RESIDENTIAL MARKET MATURES Less is more - here is a concept which is perfectly suitable for the evolution of the Romanian residential market in the first ten months of the year 2019, a period characterized by a certain fluctuation in the number of apartment transactions, both upwards and downwards, as well as by a constant increase in the housing loans balance, by a creditworthy demand, generated by customers who are very well-informed about all aspects of real-estate transactions. Less apartment transactions in the first ten months of 2019 - 27,709 in Bucharest, compared to 29,612 in the same period of 2018, according to the data provided by the National Agency for Cadastre and Real Estate Advertising (Romanian: Agenția Națională de Cadastru și Publicitate Imobiliară, ANCPI) - this is not a sign of economic situation worsening, given the ongoing growth of housing loans; it is, instead, a characteristic of residential market maturity. The situation is the same on all main residential markets in Romania. Nationwide, apartment transactions decreased in the first ten months of 2019, compared to the same period of 2018, but the total balance of housing loans saw to public transport, closeness to schools, as well as social a constant, unabating growth, reaching, in October 2019, facilities. They no longer merely buy square meters, they the level of 111.1 billion RON, compared to 102.2 billion RON are interested in the quality of the built area, in the in October 2018. partitioning of the home, in the services provided by the developer. For instance, modern technology, such as the A residential market reaches maturity through slow smart-home systems and the charging stations for growth, with minimum fluctuations in one direction or electrical cars, is a criterion which is becoming another, without any spectacular developments in wither increasingly important for the customers. The entire living sense, and this is precisely what is currently happening in experience matters to them, not just the property itself. Romania. The evolution in the prices of apartments, without any large variations, also represents a good The progress of the Romanian residential market towards indicator concerning this ever more pronounced trend its maturity is a process that will continue in the following towards residential market maturity. Nationwide, asking period, the developers whose offer is adjusted to these prices increased by 1.9% in October versus September, requirements are the ones who will be successful, and the according to the Imobiliare.ro index, whereas the increase customers will have the chance to enjoy properties where compared to October 2018 is of 5.5%. they can feel at home. This is a healthy growth, generated by the law of Mauricio Mesa Gomez creditworthy demand and by the principle of supply Country Manager tailored to customer requirements. Upon making a Cordia România purchase decision, customers are guided by a mix of criteria, which includes elements such as the quality of design, fair prices, green areas, good location, easy access 3 MARKET OVERVIEW compared to last year, which means that, in the long term, the supply of old properties will be tightening even more. Competition for the purchase of such properties will become even tougher, resulting in a price growth. In Bucharest, the price of old apartments grew by approximately 4% over the past year, first of all because of the drop in supply for this market segment. New apartments are less accessible Over the past two years, we have been monitoring the new residential projects in the country’s major markets, which projects are currently in a licensing process or under construction. Although the number of apartments existing for sale within new properties was, in the third quarter, comparable to the preceding one, we estimate that fewer units were sold, and new apartments now have The positive evolution of demand has led to the a longer time on market. We identified two main causes of relaunch of price increase this new slowdown on the new properties market: the The positive evolution of demand, registered in the more pronounced and accelerated growth in prices, second quarter of 2019, was maintained in the third compared to the old market and, respectively, the delays quarter, to the extent that approximately 175,000 potential occurring in the completion of residential developments. buyers from the six major cities interacted directly with In Bucharest, the asking prices for the new apartments the sellers through the imobiliare.ro portal - which available for sale increased, over the past year, by 9.1%, represents an annual growth of 16%. This confidence in significantly above the national 6.1% average (however, the market is also reflected by the increase in the sale of note must be made of the fact that several projects real properties registered by ANCPI; over the last four located in the Capital’s central and Northern area were put months (July-October), approximately 200,000 properties up for sale). were traded nationwide, compared to 180,000 in the similar period of 2018. As we have mentioned before, another obstacle for those Against this background, house prices returned to a more who purchase new homes is the 19% VAT. That is due to pronouncedly ascending trajectory, after last year’s the fact that, in the high-rated areas of the major cities, moderate evolution; the quarterly growth rate thus stood the more spacious apartments (having three or four at a 3.2%, compared to an additional 0.4% in the previous rooms), but even the ones with two rooms, exceed the quarter. The price difference over 12 months also reached RON 450,000 threshold. The higher prices which can be 6.1% in the third quarter, compared to 3.5% in the previous found on the new properties’ market, correlated with the one. additional taxation of the homes within this category, push buyers towards older apartments - a phenomenon Demand weakening on the old properties market which can only have negative effects, for both the new Housing sale is, surely, closely related to the demand and residential segment, and for the market on the whole. supply existing on the market. The relaunch in demand, as it was felt in the last two quarters, put new pressures on Dorel Niță the existing supply, which had resumed its growth at the Head of Data and Research, Imobiliare.ro start of the year. However, last quarter, the supply in the old properties segment stagnated nationwide, compared to the previous year. In addition to the properties which were already for sale, the number of offers which entered the market over the past three months was 5% less 4 RESIDENTIAL PRICE INDEX In the third quarter of 2019, asking prices for residential properties in Romania increased, on average, by 3.2% compared to the previous quarter, according to the data centralized by Analize Imobiliare. Although it is not substantial, this progress is higher than the average increase registered in the first two quarters of the year, and even in the four quarters of the previous year. However, what is worth mentioning is that this acceleration in price growth rate is not felt uniformly nationwide. Thus, the data of Analize Imobiliare indicates that the most important contribution to the general progress of listing values was specifically that of the new apartments from Bucharest. The housing units within this category thus stand at a price level which is 9.1% higher than the one valid in the similar period of the previous year. By comparison, the difference valid for the old apartments segment in the Capital is significantly lower - more precisely, we were dealing with an additional 4% for 12 months. The more than double advance registered on the new apartments market can be explained not by the price growth proper registered for the new homes already “The most significant contribution to the general advance of listing values was, available on the market, but especially by the fact that the specifically, that of the new apartments in Bucharest, given the addition of housing new residential stock was supplemented over the last units to the new residential properties segment.” period by residential properties having a better location and higher quality - which is, of course, equivalent to a 2 higher price level. 5 0 Concerning trading prices for housing, the newest data 2 0 published by Eurostat and the National Institute of 0 Statistics (INS) reveals, for the second quarter of 2019, a 1.6% quarterly growth and, respectively, a 4.2% annual 15 growth at the level of the European Union. For the local 0 market, the quarterly growth was of 1.6%, therefore equal to the average registered in the EU states. The 12-month 10 price difference was, however, of 4.8%, so it was somewhat 0 Residential price index (2015=100) higher than the European average. 5 0 2004-Q3 2005-Q3 Romania (Analize Imobiliare and Imobiliare.ro) European Union (Eurostat, EU28)) Romania (INS) 2006-Q3 2007-Q3 2008-Q3 2009-Q3 2010-Q3 2011-Q3 2012-Q3 2013-Q3 Source: Analize Imobiliare, Imobiliare.ro and Eurostat 2014-Q3 2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3 5 EVOLUTION OF RESIDENTIAL PROPERTY PRICES After it stood at 0.8% in the first quarter of the year 2019 and, respectively, at 0.4% in the second one, the quarterly price growth rate reached 3.2% in the third quarter.