Home prices expected to rise by up to 20% in 2008
24 March 2008
The present demand for housing is not only by private investors, who are attempting to take advantage of the sustained construction activity, but also developers and real estate agencies, who are investing in real estate projects, according to the most recent study of real estate services company, Atisreal Romania, part of BNP Paribas, Business Standard daily reports.
These are acquiring a significant number of homes to resell later on the secondary market, once the projects are finalized. The total stock of housing rose last year by 13,623 new units in Bucharest, while in the same period 19,116 homes were built in Ilfov County, on the outskirts of Bucharest.
According to Antonio Zarnescu, Commercial manager of Spanish company Gea Prasa, some 60 percent of total projects announced are in Bucharest. Prasa added that supply in the 2005-2007 period was dominated by homes costing EUR 150,000.
According to representatives of Real estate service provider Colliers International, present supply is 39 projects with over 200 units.
The potential of these complexes is some 33,200 homes, of which some 11,200 units have already been put up for sale, and only 4,000 still available.
Of the total supply, some 24 projects, which include 6,200 units, are concentrated in northern Bucharest. According to real estate analysts, prices will rise in 2008 by some 15-20 percent, one of the reasons being the introduction of value added tax (VAT) on real estate transactions.
In general, the average price of a newly-constructed apartment is EUR 1,400-1,800/per constructed square meter. In some cases, the price per square meter differs due to location within the building.
As such, the price of apartments on upper floors can be 10 percent higher. Developers prefer to set sales prices based on destination of space. For balconies and terraces, store space and common areas, prices are set separately, usually at 50 percent of the sales price of habitable space.
According to the study carried out by Zarnescu, the rise in real estate loans in Romania in the past two years exceeded EUR 400 million in June 2005 to EUR 2.7 billion in June 2007. By mid-2007 the volume of real estate loans had increased 48 percent year-on-year.