Unfortunately, in Romania real estate transactions do not differentiate between “asking price”, “deal price” and “cost”, the main reason is due to the lack of data on real estate transactions, explains Dorel in a discussion with HotNews.ro Niță. co-founder and managing partner of ValorEasy.ro. About 180,000 individual units traded in 2022, down from 2021 (when they topped 183,000).

Value is an estimate of the property’s value at a given point in time, an estimate of the deal price based on sale prices or asking prices for similar properties in the area, based on supply and demand, financing terms and motivation to sell or buy, Nita says.

Are the current prices low, fair or high?

A real estate agent or appraiser can estimate the market value of a property for which it would sell under normal competitive market conditions, after proper marketing.

Only then will we be able to determine whether the property has been overvalued or undervalued if the property is selling at a higher or lower trade price than market value.​

Housing prices in the EU have increased by 37% over the past 22 years. A decrease was observed in only 3 countries

Over the past 22 years, there has been an upward trend in housing prices. It is true that in the pre-crisis period prices fell, but then the recovery was quite sudden (especially between 2015 and 2021), writes Eurostat.

In total, over the past 22 years, prices have increased by 37%. The biggest growth was observed in Estonia (+139%), Hungary (+122%), Luxembourg (+115%), Latvia (+101%) and Austria (+100%), while the decline was registered in Italy (-13) . ). %), Cyprus (-8%) and Spain (-2%).

Rent also increased by 16%

In addition, over the past 22 years, there has been a constant increase in rents in the EU by an average of 16%. The biggest increases were recorded in Estonia (+154%), Lithuania (+110%) and Ireland (+68%), while declines were observed in Greece (-25%) and Cyprus (-3%), Eurostat also shows.

Expectations and risks for 2023

The real estate market is an important indicator of how the country’s economy is doing, says Dorel Nice.

The most important factors affecting property prices are household disposable income, construction costs and interest rates. Any change in the main influencing factors is felt immediately and directly in the real estate market.

Regarding income, various national and international institutions forecast a positive increase in real wages for 2023 (the nominal wage increase will cover the inflation rate, the minimum gross wage for the economy will be increased to 3,000 lei per month).

Experts are also optimistic about a slowdown in interest rate growth due to a slowdown in inflation (the National Forecasting Commission sees an average annual inflation rate of 9.6% in 2023 and 8% at the end of the year compared to 17 last year). % in November 2022).

The increase in demand from the construction sector (both residential and in the framework of large-scale infrastructure works), as well as the lack of raw material stocks, have led to a sharp increase in prices for all construction materials over the past two years, the most important of which is reinforced concrete. According to the INS, the cost of construction of residential buildings increased by 35.8% in 5 years (2015-2020), and by more than 30% in the last two years.

In the near term, there may be a decrease in the prices of materials, but it affects only the prices of individual housing construction, not collective housing. If we also look at the crisis period of 2009-2014, the cost of construction increased by 13%.

The market benefit is the start of concrete steel production at COS Targoviste, the only production unit in Romania.

Is it a good idea to invest in real estate in an inflationary market? recommendation

Some investors are anxiously looking ahead to 2023. After a period of growth, there inevitably comes a tipping point when supply balances out or begins to exceed demand – either because there are too many properties for sale or rent on the market, or because of sudden changes in the economy. because of which the demand has decreased, says Dorel Nice.

This is an important point, some investors liquidate their portfolio for fear that the property will remain vacant, unsold or will be sold at much lower prices. Other investors are waiting for the end of the recession to buy other properties on apparently better terms.

I would like to make two recommendations, says Dorel Nice

• 1. Try to identify properties that you believe will perform well in the next real estate cycle, now is the time to determine your buy and hold strategy. 2.

• There are opportunities in every phase of the real estate cycle, and investors should identify them as they continue to analyze properties for sale and rent. Don’t wait.

How has inflation affected rents?

In 2022, we did not observe significant fluctuations in rental rates under current contracts in rented accommodation when the owners wished to leave their accommodation occupied. An increase in existing rental rates may lead to the emergence of vacant properties with a supply of rental housing.

However, as existing contracts expire, depending on market demand and vacancy, the new rental rates may be increased by 5-10% from the expired ones.

Demand for rentals may be affected by reduced affordability, which may encourage buyers to rent.

How was 2022 in the real estate market?

Overall, the ValorEasy co-founder believes that if 2021 was the best year since the residential real estate market restarted (starting in 2015), then 2022 could be considered the second best.

The recovery from the pandemic boosted sales, so that in 2022, individual units were sold around 180,000, less than in 2021 (when they exceeded 183,000) but more than in other previous years. And even though the latest data shows that sales prices fell slowly in the second half of the year, the annual growth rate is (still) positive.

The real estate market is slowing after its most overheated period in a decade. This is good for market equilibrium by providing more choice for buyers who can trade more than the seller’s initial price.

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