Year-end price level, paradox between expectations and reality
Development activity in the residential sector continued this year despite the health crisis, and the transactional and price environment was on an upward trend. All in the conditions in which more and more Romanians are looking for spacious houses in good locations with the potential to increase their value over time, such as those in Boreal Plus.
The housing segment registered a major recovery after the 2 months of the state of emergency in which waiting was the keyword for buyers. By October, the national average of house prices was already above the level of 2019. At the national level, an apartment came to cost 1,335 euros per square meter in October, up 2.4% compared to the same period of last year, according to data provided by the Imobiliare.ro portal.
At the same time, the number of real estate transactions registered a massive increase of 43% in October compared to the same period last year, up to over 83,000 transactions. Data from the National Agency for Cadastre and Advertising indicate that October marked a record of the last three years in terms of housing transactions.
The increased interest in real estate assets can be explained by the desire of Romanians to protect their economies against the background of inflationary pressures. Interest rates charged by central banks in large economies are close to zero, eroding the potential value obtained from bank deposits.
If investors in government securities and stocks take high risks and high volatility, especially in a context full of unknowns, a home generates a predictable income stream over longer periods. In fact, the return on investment in an apartment can reach 7%.
Unique discounts for recently launched projects in development
In order to meet the clients who want a price advantage when purchasing a new apartment, Impact Developer & Contractor came up with exclusive launch offers within the Boreal Plus project in Constanța.
Purchasing an apartment in the project phase brings significant savings for the buyer, and the gains are even higher when purchasing a housing package for investment purposes.
In the Boreal Plus complex in Constanța, a 62 sq m studio has a special price of 55,782 euros + VAT in the launch offer. You can get a discount of up to 8%, depending on the advance paid.
An open space 2-room apartment with an area of 79 square meters has a price in the launch offer that starts from 70,176 euros + VAT. The special launch price for a 3-room apartment with an area of 98 square meters starts from 89,826 euros + VAT.
The upward trend in house prices, with a global impact
The residential market in Romania continued to register high demand in the big cities, and the prices had a moderate growth rate. A new home in a good area of the city will be of greater value over time if we look at developments in housing construction costs, including labor and materials, which have put additional pressure on the final price.
The local residential sector is influenced by factors specific to Romania, but the great phenomena that influence the real estate markets in Europe and America should not be ignored.
Studies suggest a strong link between lower real interest rates and higher house prices, according to an analysis by The Economist. In America, average price growth per square meter accelerated faster in the second quarter of 2020 than in any three-month period before the 2007-2009 financial crisis. Three factors explain this force: monetary policy, fiscal policy and changing buyers’ preferences.
Mortgage lending costs have declined due to lower monetary policy rates, and buyers’ disposable income has been supported this year by public programs designed to reduce the risk of a prolonged recession due to the pandemic. To all this is added the desire of people to live in a larger space, especially due to the fact that the house has been transformed into an office and classroom for many families.
In 2019, households in the middle OECD country allocated 19% of costs to housing costs. With one-fifth of office workers continuing to work from home, many potential buyers may want to spend more in a nicer place than lived, is also shown in the analysis of The Economist.
In Romania, house prices have registered annual increases in the last 5 years. If the advance in 2015 was 2.9%, it accelerated to 6% in the next 2 years. The price increases in 2018 and 2019 were 5.6% and 3.4%, respectively, according to Eurostat data. The same source shows that the growth rate of housing prices in Romania was higher than the EU average and in line with the development of other markets in this region.
Despite the challenges posed by the medical crisis, people’s desire to have a welcoming and spacious home is more important than ever. The advantage of buying an apartment at a special price brings financial benefits that cannot be ignored, especially in an economic environment characterized by caution.