Storia.ro, the real estate platform with the most ads on the market, is launching a study on how Romanians perceive the real estate market today, the actions they take and their estimates for the next 6-12 months. The data analyzed were collected in September 2022 and are aggregated from the Storia.ro and OLX Imobiliare platforms.
Asked if they want to buy a property in the next 12 months, 38% of respondents said they were sure they would, a third were oscillating between yes and no (33%), and 12% were leaning towards yes. Only 9% are sure that they will not buy a home in the next year, and another 8% are inclined not to.
The budget allocated for the future property is for half of them (54%) below EUR 60,000. A quarter (25%) have a budget between €61,000 and €90,000, 12% between €91,000 and €120,000 and 8% over €121,000.
Related to how the budget allocated for real estate purchases evolved in the last 6 months, for almost half of them (42%) it remained constant, while for 23% of respondents it increased, and for 35% it decreased. The evolution differs according to the budget. 44% of those willing to give up to €60,000 have reduced their budget, compared to just 18% of those with over €121,000. Budget increases have come in particular among buyers looking for homes of €91,000-€120,000 (30%) and those over €121,000 (31%).
Those who said they would definitely not buy a property, when asked what would be the change that could make them change their mind, 75% said that falling house prices would be the deciding factor. In second place in terms of importance is the decrease in interest on loans (27%), followed by the decrease in other day-to-day costs (19%) and the increase in personal income (18%). The urgent need to move would convince 8%, followed by finding the perfect property for that person – 6% and the significant increase in rent – 3%. Of the respondents, only 10% stated that nothing could change their decision.
“Regarding the expectation related to the evolution of prices, it is normal for people to want them to decrease. They are overwhelmed by increases on all levels and do not want a price increase in the case of their future home as well, which also has a big impact on the total budget. Whether or not this drop will materialize remains to be seen. In real terms (adjusted for inflation) we already have a decline in average real estate prices (basically real estate prices have risen slower than the rate of inflation), so we are in the mid-real estate cycle correction period. In nominal values (actual figures), however, it is hard to believe that inflation will not also affect the construction market, which has two main components: materials and labor (manpower). My expectations and those of my colleagues in The Concept are that while bank interest rates are high, we will have a slowdown in growth to a few percent year-on-year, and from the moment interest rates drop, we will witness an explosion of prices over a period of 3-5 years. Romanians earn much better (on average 2.3 times better) than they earned 14 years ago during the old economic crisis, on the other hand real estate prices are lower than at the peak of 2008, on average by 10-12%,” said Daniel Tudor , representative of The Concept real estate agency.
As for the method of payment, those who would buy a property would pay 60% in cash, and 40% with credit. Those who can pay cash answered 49% that they are sure they want to buy a property in the next year, compared to 33% of respondents who would use a loan. In the last 6 months, the budget of those with cash remained the same for 44% of respondents, decreased for 33% and increased for 23% of them. For those with credit, however, the budget decreased for 40% or remained the same (38%). The amount allocated to the home increased for 23% of buyers with credit.
Regarding expectations for the next 6 months, 39% of participants anticipate a significant drop in prices, 27% – a slight decrease, while 9% expect them to stagnate. Only 8% expect a slight increase and 5% a significant one. 12% say they don’t know what to expect. Those who most expect price drops are respondents with budgets of up to €60,000 (42%), while significant increases are anticipated more by those with budgets of €91,000-120,000 (8%).
Over the next 12 months, however, the proportion of those who expect prices to be significantly lower falls to 30%, with 24% to fall slightly. A slight increase is estimated by 12% of respondents, a significant increase – by 7%, and stagnation – by 12%. The proportion of those who do not know in which direction prices will go increases to 18%. For this waiting horizon, buyers with a budget of over EUR 121,000 are the ones who expect significant decreases, and increases are anticipated by those with a budget of EUR 91,000-120,000 (10%).
The topics that influence real estate decisions during this period are: for 62% – higher housing prices, for 38% – the increase in interest on loans, for 36% – higher prices for the daily basket, for 28% the geopolitical context, for 16% the tightening credit conditions, while 8% mention the changes in the new Fiscal Code.
On the state of the real estate market in Romania, 80% of the respondents believe that we are in a real estate bubble and so many that it is better to postpone the purchase of a property. 36% believe that housing is still affordable and 19% that it is a good time to buy a property. 54% of those with a budget of over €121,000 considered housing affordable, compared to only 31% of those with €91,000-120,000. The perception of a real estate bubble is not proven by the market figures, however.
The affordability index is 1.85 in the first quarter of 2022, while in 2008 – its value was almost 5. The affordability index is calculated on the basis of real transaction prices, as a ratio of the average price per square meter (sq. ) of housing and the average net salary in the economy. The feeling of a real estate bubble, not proven by the numbers, also influences the general feeling that describes the way respondents relate to the real estate market: concern, in proportion to 48%, followed by discouragement – 30%, frustration – 18%, confusion – 18%. Hope is mentioned by 13%, followed by curiosity – 8%, optimism – 6% and indifference 3%.