Romania Housing Market Crash Makes up for Lost Time
16 September 2011
After 2 years of severe decline and a drop of up to 47% in 2010, the recent performance of Romanian property prices has experts worried that the market is in for a prolonged downturn.
Romania is a late comer to the house party, that is the housing market crash party, but it seems it is making up for lost time.
- Evaluation firm Darian puts the drop in average house prices for 2010 at 10%.
- Radio Romania International says existing homes lost 20% of their value on average last year, with 3-4 bed apartments falling 25%.
- But new build houses and villas were hit even harder with a 42% drop according to imobiliare.ro. The real estate firm also said townhouses and villas in Bucharest lost 19% of their value in 2010.
- The Marketbeat: Romanian Real Estate Report, Spring 2011 put the drop at 15%-20% y-o-y in 2010. The report also said that prices were 55%-60% lower than the peak in Q1 2008.
Worse, experts believe the decline has continued in the first six months of this year. This is despite several interest rate cuts since June 2010, including the recent cut of 25 basis points to 6.25%.
Romania is now seeing all the growth fuelled by its EU accession in 2007 being torn away. But this is hardly surprising; according to the reports, Romania has failed to deliver on many of the promises made at the time of accession, including reducing corruption, which is still rife in the country.
Today's breed of savvy investor is not taking any chances with corruption at such levels, and according to agents on the ground, all buyers are waiting for prices to reach the new low before buying.