More expensive real estate project financing to raise home prices

"Local banks seek refinancing on external markets. As Romania is protected against the international crisis, because the foundation for economic growth is sound, banks will be the only ones affected. Most Romanian banks seek refinancing in Europe, at higher costs, which will reflect in the cost paid by developers and individuals," said Antonela Marchievici, Head of Real Estate Department of UniCredit Tiriac Bank. She added that higher costs for financing real estate projects will impact on prices of homes in the coming 3-5 years. Higher financing costs, an increase in the price of land, construction and the workforce will also lead to a rise in prices of homes, according to Antonela Marchievici.

Sorin Popa, Deputy General Manager of BRD-SG, Romania's largest lender in terms of assets, told Business Standard that the bank is very cautious when selecting real estate financing, "because the market does not accurately reflect what is happening on the real estate segment."