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Real Estate :Less apartments built in Romania in 2011
The number of apartments completed in Romania last year dropped by 34% compared to the boom period reached in 2008. This is the fourth largest drop in six states analyzed by a study of the Polish research company PMR quoted by Mediafax. PMR shows that 44,456 new apartments were completed last year in Romania compared to 67,255 units in 2008. In these conditions, the Romanian market ranks second among the 6 markets analysed, in point of the number of new apartments completed annually, after Poland, the leader with 130,954 units last year (compared to 165,189 units in 2008). They are followed by Czech Republic with 28,628 units in 2011 against 41,649 in 2007, Bulgaria (14,012 apartments in 2011/22,058 units in 2009), Hungary (12,665 in 2011/41,084 in 2005) and Slovakia (11,500 in 2011/18,834 in 2009).
What can new developments change?
It is less probable that the situation will change significantly in Romania in the following years in the housing sector. The first condition needed to improve the situation is economic growth with positive effects on the consumers’ purchase power which would absorb a part of the large offer in the residential market. Later, this thing would encourage banks to resume financing and it would be a triggering factor for a boost of the developers’ activity. In spite of dropping prices in Romania, developers are not yet able to complete projects already initiated or to initiate new ones, shows the report “Housing construction market in Central Europe – Development provisions for 2012-2014”.
Romanian Statistics data show that the number of apartments completed last year dropped by 4356 units to 44,456 and that the share of units completed in the rural area has continued to grow.
The PRM report shows that in 2011 the residential market in Central Europe dropped to a historic level, considering the fact that last year 242,205 houses were completed last year in the six countries analyzed, a third less compared to 2007-2008.“Estimates for 2012-2014 show that the region will recover slightly but figures from the boom period will not be reached,” the report mentions.
Situation in Hungary
The most rapid drop was recorded in Hungary, where both natural persons (-61%) and companies (-76%) built a record low number of houses. The middle class, the main investor of new houses had small financial resources. Companies have also planned less developments considering that prices have dropped and was also a difficult market for new houses. In fact, projects of over 1000 houses have disappeared from the market.
For 2012 the authors of the study estimate the number of houses built in Hungary will drop, at a slower rate of 5%, and a return in not expected sooner than 2014.The second largest drop was registered in Slovakia, the smallest country in the area. This situation was based on the reduction of the developers’ activity and the small number of Slovaks who could buy a house from their own money, as the market of mortgage loans was still underdeveloped.
Bulgaria could be affected from the situation of Greece
In Bulgaria, as in Slovakia, the top of the number of houses built was recorded in 2009, later than in other states in the area. At present Bulgaria’s economy and residential market will be affected by trade relations and financial connections with Greece, the most powerful of all Central European countries.
In the Czech Republic, even if the stock of unsold houses is still big, it is expected that the housing development will return to a healthy increase in the next years. In Prague alone, which has remained a magnet for developers of largest projects despite a tock of 3000 new unsold houses at the end of 2011, other 20,800 apartments are expected to be completed in the next two years.
In Poland, the evolution of the market for housing developers is determined by buyers, since many houses remained unsold during the crisis. At the end of 2011, developers offered about 48,000 houses for sale, 77% of the offer being under construction. The number of new houses has grown by 37,500 units (25%) since 2010.
Despite the difficult situation of the market in past years, the authors of the study say that on the long run the construction market will become stronger, mainly because of prospects of economic growth in the area and the big difference between the housing stock and the number of inhabitants.