iO Partners, in collaboration with Storia.ro, has continued its series of analyses on the structure of tenants and homebuyers prospecting the residential market in Bucharest, with the aim of understanding how their preferences and profiles have evolved over the course of a year.

This is the second annual analysis that captures changes in the housing market, considering socio-demographic and lifestyle characteristics, current housing situations, and future housing plans, as well as how these individuals allocate their budgets.

One primary conclusion is that the percentage of respondents planning to purchase a home in the next 12 months has decreased by 8 percentage points, from 45% in 2022 to 37% this year. In contrast, the percentage of those looking to rent has significantly increased, from 32% in 2022 to 48% in 2023.

At the same time, 15% of respondents remain undecided on this matter. This clearly indicates the impact of rising interest rates and, in general, reduced housing affordability due to high financing costs and high inflation, limiting the availability of financial resources.

Regarding the type of housing being sought, small apartments (studios and 2 rooms) remain at the top of tenants' preferences with a cumulative percentage of 86% in 2023, compared to 82% in 2022.

If in 2022, 33% of respondents were looking to rent a studio, today, this percentage has increased to 42%. The preference for 2-room apartments has remained similar (slightly decreasing from 49% in 2022 to 44% in 2023).

The most attractive neighborhoods in Bucharest for renting are currently Dristor (21%), Tineretului - Timpuri Noi (18%), Titan (17%), Drumul Taberei (17%), Unirii (16%), Victoriei – Romană – Universitate (15%), and Militari (15%).

Compared to the previous year, there has been a change in rankings, with the Dristor neighborhood surpassing the Tineretului - Timpuri Noi area and a new entry into the top being the Drumul Taberei neighborhood, which has gained attractiveness due to the new metro line.

For potential homebuyers, Titan remains their top preference, just like last year (17%), followed by the Tineretului - Timpuri Noi neighborhood (16%), and the Drumul Taberei and Dristor neighborhoods tying for the third spot (14% each). The change from the previous year involves the decrease in attractiveness of the Drumul Taberei neighborhood and an increased interest in the Dristor neighborhood.

The common reasons that justify the attractiveness of these areas have remained the same, including easy access to the underground transport network, proximity to large parks, and shopping centers.

The study results highlight the desirability of central areas like Unirii or Victoriei-Romană-Universitate, where respondents wish to live, but high purchase prices lead them to opt for renting.

As a result, approximately 16% of respondents want to rent in the Unirii neighborhood, while only 10% consider buying a home in this area.

Similar zones, with high desirability for renting but less accessibility for buying, include Dristor, Crângași, or Drumul Taberei. There are also areas that are more attractive for purchase than for renting, such as Băneasa, 1 Mai, Moșilor, Decebal, Carol, Dacia – Eminescu, or Dorobanți.

The neighborhoods that are equally attractive for both renting and buying are Victoriei – Romană – Universitate, Ștefan cel Mare, Drumul Taberei, Berceni, Bucureștii Noi, Iancului – Pantelimon, and Popești – Leordeni.

The study results also highlight the most critical factors considered in the decision-making process between renting and buying a home.

Those who intend to rent opt for this option rather than purchase due to combined factors, including financial constraints or concerns about taking out a bank loan (95%), the desire for maximum housing flexibility (53%), the availability of suitable rental homes according to their comfort standard (48%), and the decision to invest savings in purposes other than real estate purchases (38%). Additionally, 34% of respondents state that they cannot find properties for sale that fit their needs.

It's noticeable that the decision to remain in rental housing is predominantly based on financial constraints (95% in 2023, compared to 81% in 2022), while the importance of flexibility offered by renting is less than in the previous year (53% in 2023, compared to 72% in 2022).

On the other hand, the decision to purchase in 2023 is primarily motivated by the ability to accumulate the necessary amount for buying (81%), indicating that, in many cases, being a tenant is not a personal choice but a temporary condition due to a lack of budget for real estate purchase. This reason is followed by the desire for housing stability, which is not guaranteed in the volatile rental market (64% in 2023, compared to 88% in 2022).

The percentage of those motivated to purchase for investment purposes has decreased to 40% in 2023 from 54% in 2022. In the same vein, only 40% of respondents in 2023 see a similarity between the monthly cost of a loan and rent, compared to 61% in 2022.

The primary factor influencing customers either toward purchasing or renting is the monthly household income. The major change from the previous year is that the minimum income threshold at which most respondents (63%) consider purchasing has increased from 4,000-8,000 lei last year to over 8,000 lei this year.

Regarding rentals, if in 2022, 69% of individuals with a monthly household income below 4,000 lei considered renting the most affordable option, in 2023, this threshold has increased to 6,000 lei for 70% of respondents.

Another factor influencing the decision-making process is age, which is directly correlated with monthly income and marital status. Over half of respondents (63%) under 34 years of age prefer renting, while among those over 34 years of age, only a third (30%) plan to rent a home.

Regarding the correlation between the number of household members and the intention to buy or rent a home, if in the previous year, more than 90% of couples with children wanted to purchase a home, this year the percentage has decreased to 63%.

In comparison, individuals living alone or childless couples prefer to rent a home in 65% of cases, compared to 60% in the previous year.

The survey also analyzed the intention to relocate based on current housing status, where no significant changes from the previous year are observed.

As a result, the results reflected that 47% of individuals looking to rent already live in rental properties, 30% live with their parents or other relatives, while only 9% own a home. As for individuals interested in purchasing, 45% already own a home and wish to make an improvement, 30% live in rental properties, and 17% live with their parents or relatives.

The study was conducted from July to September 2023 on a sample of over 1,523 individuals prospecting the market on the Storia.ro and OLX Imobiliare platforms, with respondents predominantly under 55 years of age. Most respondents started their searches less than 3 months ago (43%), while approximately 10% have been searching for at least 12 months.