The impact of COVID-19 predictably continues to influence estimates and valuations of the real estate market in Bucharest. Ten months away from the beginning of the pandemic we can conclude that the impulse on the basis of which supply or demand undergoes changes is based on a completely different kind of fears, not only those arising from exclusively economic reasons.
Thus, although restrictions on movement and suspension of some activities inevitably have deeply economic implications, a direct threat to the physical integrity of society as a whole has transmitted shockwaves in the social and political environment, challenging people’s fears and shaking trust.
If during the period in which the state of emergency was established in Romania the prices requested for real estate suffered fluctuations, afterwards the data revealed a stabilization of the market (in reality there was a slight increase of 0.3% in prices and 1.5% of the number of transactions respectively). The dwelling predilection in large spaces or houses with a courtyard directed the demand in this direction.
The year 2020 cannot, in our opinion, be compared with 2008. The premises on which the health crisis has settled correlated with a higher degree of maturity of the Romanian society could be seen with predilection in the real estate market whose evolution was not in 2020 in nature to resume the major downward slope from 2008 -2010.
However, restrictions to prevent the spread of COVID-19 remained in force, as well as the uncertainty generated by political volatility, as an expression of the worsening public health crisis, continued to maintain the real estate market in a continuous fluctuation / correction period. For example, the overall evolution of the average rental price in Bucharest gradually decreased in the second half of 2020, although it has been on an upward slope since 2015. Thus, prices have fallen: a) for studios by about 10%; b) for two-bedroom apartments with about 10%; c) for 3-room apartments with about 5%; d) for apartments with 4 or more rooms with about 5%; e) for houses/villlas by about 10%. Among the most affected areas of Bucharest were Floreasca, Primavarii and Aviatorilor. Equally, Bucharest is rated as the only major city in Romania where the average price for sale of apartments fell during this period: from 1,413 euros/sqm in December 2019 to 1,367 euros in October 2020.
In the third quarter, the situation began to improve, with some analyses indicating an 8% increase in the requested price compared to the second quarter of 2020. The balance is, in REALT’s view, the approach that the real estate market in Bucharest should take in this year’s end, but also in 2021. Unrealistic expectations will be sanctioned by the long period of presence of the properties on the market or the impossibility of identifying the right property.The legislative changes in real estate matters having as their object the extension to 140,000 euros of the maximum ceiling for the application of a reduced VAT rate of 5% for the purchase of homes (provision applicable from 1st of January 2021), correlated with the maintenance of a constant and optimal rate of lending from the perspective of the degree of indebtedness are other elements that could have a positive effect in establishing the development strategies of the real estate market.
Sources: imobiliare.ro, titirez.ro, targulnationalimobiliar.ro