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Real Estate: Colliers report: Fewer and fewer Romanians afford to buy a new residence
Fewer and fewer Romanians afford to buy a new residence, taking into consideration that the prices grow sensibly more accelerated than that of salaries, due to the increase of prices for constructions materials and the present economic conditions, show the real estate consultancy company Colliers, according to which Cluj-Napoca remains the most expensive city in the country, where acquisition of an new standard apartment is the equivalent of an average salary for 12.5 years of work.
An inhabitant of Bucharest needs 8.4 years of salaries for such an acquisition, the Timisoara inhabitants need to work 8,1 years for new apartment and the Iasi inhabitants have the most reduced period of work for such an acquisition among big cities, 7.7 years of work.
In Bucuresti, Timisoara and Iasi the most accessible prices for new residences were at the end of 2020 – beginning of 2021, after the evolution got on a upwards trend, according to the Colliers data.
Cluj-Napoca had a different evolution, the new residences becoming more inaccessible during the last eight years. At the beginning of 2014, Cluj-Napoca had the most accessible houses in the big cities, the average buyer needing 9.2 years of salaries to acquire a new house, while in Bucuresti and Timisoara they needed 10.4 and 10.7 years respectively and in Iasi the period was 11.4 to cover the sum paid for such an acquisition.
The figures are not meant to show effectively the time somebody needs to buy an apartment, say the Colliers consultants, but to show if there is a discrepancy between te purchasing power and prices. Thus, an indicator for accessibility of 8 years or higher may be a worrying factor in the decision to buy, they say especially if there are other financial burdens (leading, loans, etc.) or if there no alternative sources for income besides the salary.
For comparison, in 2008 the accessibility indicator in Bucuresti was 25 years, and the buyers who suffered most were those who had loans at the limit of their possibilities, to buy a house on a overheated market, at a growing cost of the financing, in a foreign currency which was significantly appreciated against the leu.
In the context where we see a higher volatility of the influencing factors for prices, there is the risk of accelerated evolution of inaccessible houses, and every imbalance is corrected sooner or later.
In a total, last year there were supplied 71,420 residences at national level, up by 5% against the previous year. As the total surface authorized by the developers in 2021 increased by over 15% against 2020 at over 12 million square metres, the residential sector goes to new maximum of supply this year.
At the same time, the volume of real estate loans was 30% higher than in the first quarter and reached new historic maximum. In the contrary direction there are increases of interest of the central bank, which are far to be finalized and a possible weakening of the work market in the future.
Another sign of worry is the imbalance between the monetary policy interest through IRCC, used by offering new loans which at present are at 1.86% while the ROBOR indicator which affects most loans is 4.68%.
This imbalance endangers the new debtors to a significant interest risk, which will be materialized in the future quarters.
Colliers is one of the global leaders in real estate consultancy services and management of the investments with operations in 62 countries and 17,000 specialists. Their annual income is 4.1 billion dollars and their shares managed are over 50 billion dollars.