Romania remains the European country with the highest number of homeowners, according to official statistics, and although the interest in purchasing a property remains high, a significant portion continues to live in rental accommodation.

13% of Romanians aged between 18 and 55 in urban areas are tenants, and approximately 18% share accommodation they do not own with parents, relatives, or friends, according to a recent study conducted by Unlock Market Research for Colliers, based on a sample of around 1,000 respondents from urban areas.

The trend of property acquisition accelerated in the last months of 2023, in the context of proposed changes to fiscal legislation, particularly the increase in the minimum VAT rate for properties from 5% to 9% for properties up to approximately 120,000 euros, along with increases in notary fees, as indicated in the annual report published by Colliers.

As a result, many buyers rushed to conclude transactions by the end of the year, and at least in Bucharest, December was a record-breaking month, with the highest number of apartment sales in the last 15 years.

Generally, most renters are young people aged between 18 and 24 (25%), who have flexible jobs or are students and cannot yet afford to invest in a home, with renting being practically the only option.

Approximately 40% of these young people live with family or friends. Bucharest, Cluj-Napoca, Iasi, Timisoara, and Brasov are the main beneficiaries of internal migration, becoming urban centers and metropolitan areas with the fastest economic growth in Europe in the last 20 years.

Simultaneously, the number of foreigners choosing Romania for a better future has also increased. Thus, 2022 marked two premieres: the resident population increased for the first time since 1989, and the number of arrivals in Romania exceeded the number of departures (by 85,000 people).

Generally, foreigners are employed in construction, the hotel industry, and other entry-level jobs that do not require experience. Regarding housing, those who do not receive accommodation from their employer prefer to share rent with several people to reduce expenses.

A few years ago, the housing market was more favorable to buyers, as once they managed to save the necessary down payment, the mortgage rate was considerably lower than the rent for a similar property.

However, currently, this dynamic has changed in Bucharest and other large cities, especially in central areas, where rents for new apartments are even 30% lower than mortgage rates. Although rents have increased on average by 10% in Bucharest in the past year, renting a home remains a more advantageous option than buying, according to Colliers consultants. For comparison, in Warsaw and Prague, for example, rents have increased by between 25 and 40%. In other words, in all major regional capitals, except Sofia, renting is now more advantageous than bank loan rates.

Currently, the supply of homes in rental-only developments in Bucharest is close to 1,000 units, with over 3,000 units in various stages of construction. However, Colliers specialists estimate that, in the next 2-3 years, the segment of residential projects exclusively for rent has the potential to reach 5,000 homes.

Although Romanians' interest in rented housing is high, the desire to become homeowners remains strong. Compared to other Eastern European countries, Romania is still more accessible to buyers.

Colliers data shows that, in Bucharest, a Romanian needs an average equivalent of 8 net annual salaries to buy a 60-square-meter home, a figure that has not changed much for over a decade, although it is slightly higher than before the pandemic, when it was around 7 years of salaries. In 2008, at the peak of the real estate bubble in Romania, the same home would have cost approximately the equivalent of 25 years of average annual salary.

Analyzing the evolution of the real estate market and future price prospects, Colliers consultants consider it essential to observe how supply and demand interact. National Institute of Statistics data on supply, along with transactions reported to the National Agency for Cadastre and Land Registration, covering a wide range of transactions from new home acquisitions to those on the secondary market and even transactions resulting from inheritances, show that in the fourth quarter of last year, the difference between supply and demand reached significant levels, much higher than before the pandemic.

While 2022 set a record level in terms of residential deliveries, slightly exceeding previous records from the last 3 years, 2023 recorded a slight decline. In the first three quarters of the year, the volume of home deliveries decreased by over 5%, and in the third quarter, the year-over-year decline was over 11%, according to the latest data from the National Institute of Statistics.

Thus, even with a decrease of about 5-10% for the whole year, last year's supply remains quite consistent compared to the annual average recorded in the previous decade. Another important factor noted by Colliers consultants is the large decrease in deliveries of residential units in rural areas, coupled with a slight increase in urban areas.

This trend could be associated with the end of the pandemic and people returning to major cities to resume their daily activities, including educational and work-related ones.

Regarding demand, 2023 was marked by a significant increase in the real estate sector in Bucharest, with intensified activity in December, when the highest number of monthly transactions since 2007-2008 was recorded.

Even in a challenging context, the annual volume of sales was only 16% lower than that recorded in the record year of 2022. This resilience underscores the solidity of the real estate market in the capital and its ability to maintain a steady pace, even in difficult conditions. In Cluj-Napoca, apartment sales in 2023 were 6% lower than in 2022, in Iasi the decrease was 4%, and in Timisoara, 10% fewer apartments were sold compared to the previous year. (Photo: Freepik)