Below we have compiled some economic data, opinions and declarations that may represent a point of departure for the Romanian economy and especially for residential real estate market. From prudence in the face of current uncertainty, we will have to wait for this second quarter to pass to draw certain conclusions about the course of the economy and how it affects the real estate market, meanwhile, we share with you how the first quarter of 2020 has been in Romania.
For the moment what we can affirm for that the buyers have not disappeared, that transactions have continued to take place and that the constructions have not stopped.
Mortgages granted in the first quarter of 2020
The volume of mortgage loans in Romania registered a growth of almost 24% in the first quarter of 2020. In the month of March alone, approximately 270 million euros were agreed, despite the fact that the average interest is around 5.75% annually.
The volume of loans agreed in this first quarter of 2020 represents the highest value of the last decade for this period of the year. In March 2020, 35% more loans were agreed than in the same period of 2019.
Even with these data, bankers call for caution, since the Coronavirus crisis developed in early March and many of the approved loans were under study prior to entering the state of emergency.
Forecast: European Bank for Reconstruction and Development
EBRD: A 4% contraction in the Romanian economy is expected in 2020. At the same time, they predict a 4% recovery in 2121. Although the forecasts are more uncertain than ever.
According to EBRD economists' estimates, the internal blockage reduces private consumption of services that involve direct contact and of durable consumer goods, which represent approximately 30% of consumption. This impact can be offset by the growth in food purchases, which represents 25% of the shopping basket, the highest weight in the European Union.
For its part, the Romanian government forecasts a 1.9% drop in GDP by 2020, one of the most optimistic forecasts. The European Commission expects a 6% contraction and the IMF 5%.
The EBRD report mentions the drop in investments in Romania due to uncertainty, pressure for liquidity and the interruption of supply connections, factors that could interrupt ongoing investment projects.
At the same time they are betting on a recovery of 4% in 2121 brought about by the private sector, although it will be conditioned by the relaxation measures that are going to be implemented over the current restrictions. Economists are optimistic and believe that the impact of the economic crisis will not extend the long term.
Romania experienced the highest annual economic growth in the European Union, in the first quarter of 2020, according to Eurostat Romania.
The GDP of the Eurozone decreased by 3.2% in the first quarter of this year compared to the same period in 2019. The data reported on the GDP of Romania shows a growth of 2.7%, compared to the same period of 2019. This represents a growth of 0.3% in relation to the previous quarter.
The prices of apartments in the largest cities in Romania evolve positively in April.
Only one of the large provincial capitals of Romania (Constanta) experienced a drop in the average house price in April. They also saw a decrease in the price of old housing in other provincial capitals but without influencing the rise in the average price.
In the context of the measures taken by the authorities due to COVID-19, at the national level, a decline in the growth rate of apartment prices has been felt. Nationally, there was a decrease of 1.7% in the month of April, after prices rose by 1.8% in the national average in March.
In Bucharest, after a decrease of 3.4% in the month of March, the month in which both the supply of available apartments and the demand fell by around 60%, the month of April registered an increase in the average price of 2 %. Contrary to all forecasts, the expectations of sellers in the month of April have grown so much for old housing, with an appreciation of 0.9%, placing the square meter at 1,382 euro, on average. New housing rose 2.5%, the average of the square meter standing at 1,451 euros.
In other large provincial capitals prices also rose: Brasov + 1.8% 1,219, euros/m2. Cluj Napoca + 1.5%, 1854 euros/m2. Iasi + 2.5%, 1063 euros/m2. Timisoara + 1.1%, 1,325 euros/m2. Only Constanta was affected by a decrease in prices -1.4%, 129 euros/m2.