Unusually High Demand for Houses in July

The demand for houses in Romania has registered an important increase in July – a month traditionally low on demand in this industry. “The decrease of the real estate prices to a minimum level, the news about the depletion of the funds for the First Home program, the very low interest rates offered by banks and the statements of the Governor of the National Bank of Romania regarding the risk of a new real estate bubble that could lead to prices increase, made the Romanians go out shopping for homes”, shows a press release from the real estate website Imobiliare.net.

The website has registered in July an increased by 20% of the requests on the real estate market. The two-bedroom apartments have registered the greatest increase in demand, by over 28%, followed by studio flats (25%) in July compared to the previous month. “Traditionally, in the real estate industry, July and August are dead months, with significantly lower demand compared to the period March – May, but in this year, things have changed. The very low interest rates for bank deposits (less than 3% per year) made many people cash out their money from banks and invest them in real estate. The calculation is simple: if you have 50,000 euro in a bank deposit, you earn maximum 1,300 euro/ year from interest rates, which means about 100 euro/ month, but if you invest in a two-bedroom apartment, which you then lease, the yield could be four times larger, as the average rent in Bucharest in 400 euro/ month”, consider the representatives of imobiliare.net real estate website.

“The real estate market is influenced directly by the psychological impact of the economy on the population. (…) On their turn, the banks are sending a positive signal to the market and compete with advantageous mortgage loans as the interest rates lave reached to historical minimum levels”, shows the release from Imobiliare.net.

According to the source, at this moment there are plenty of signals that the real estate market ha stabilized, but if we take into consideration the theory of economic cycles and the warning of the National Bank of Romania about a new real estate bubble, then we should expect the prices to start raising again at any moment.

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