The drop in prices of residential properties by some 15 percent, following the country's accession to the EU, highly disputed since mid-2006, has now become a taboo subject. In actual fact, prices of Romanian homes have not decreased as most analysts indicated, neither did these rise significantly, according to experts. Sources on the market say that prices of houses and apartments on the secondary market (old homes) in Bucharest stagnated in real terms once Romania joined the EU.
"According to various studies, prices on the secondary real estate market increased by 10 percent since the beginning of 2007," Gabriel Alexandru, Vice President of Century 21, the local subsidiary of the largest global real estate franchiser, told Business Standard. However, Alexandru says the 7.3 percent depreciation of the European currency (EUR) against the Romanian leu (RON) in the first six months of 2007, coupled with the fact that property prices are quoted in euro, has lead to an increase of only 2.5 percent of prices in RON in real terms.
Moreover, if inflation is taken into consideration, the increase is about 0.8 percent, according to Alexandru. Century 21's VP says that prices of new homes increased by 20 percent, and this theory is indirectly confirmed by Radu Zilisteanu, spokesman of the Romanian Association of Real Estate Agencies (ARAI).
He believes home prices have risen on average by 8-10 percent in RON on secondary and primary markets (new residential projects). "We can talk about lower prices on the real estate market in two years and only for buildings older than 30-40 years," Zilisteanu said, adding that primary market demand and sector competitiveness will be identified. The value of real estate investments exceeded €1,500 million by mid-2007.
