The housing loan stock is now growing by only 1.2% in Romania, with the slowdown becoming noticeable starting with the second half of last year, while the number of apartment transactions fell by almost 30% in Bucharest and regional cities in the first five months of the year, according to Colliers.
By comparison, in the previous four years, the balance of housing loans grew by an annual average of 10-12%.
The prospect of inflation slowing down, both in Romania and at European level, will have the effect of relaxing the financial markets, which will ultimately lead to lower borrowing costs for housing acquisition, suggest Colliers’ experts.
IRCC, the reference interest rate for home loans will remain relatively constant from 5.98% in Q2 2023, for Q3 it will be 5.94%, and in the last three months of the year it is estimated to reach around 5.95%.
Meanwhile, since the beginning of this year, the 3M ROBOR has fallen by 1 percentage point, from 7.56% to 6.55% today. The fall in interest rates on IRCC-linked loans (new loans, but also old loans that have converted from ROBOR to IRCC) will take longer, however, given the methodology used to calculate this index.
“Even though the growth pace in construction volume has slowed compared to previous years, the first four months still reflected a 1.1% increase in residential construction volume compared to the same period last year. Those who continue to invest in developing new projects during this period will have the most to gain in the run-up to next year, when we expect financing conditions to relax. Also, the very good volume of infrastructure works during this period will unlock the development potential of both the capital area and the cities located along the highways to Moldova or Transylvania," said Gabriel Blăniță, Associate Director Valuation & Advisory Services at Colliers Romania.
In Bucharest, the adjustment in the supply of new homes against the background of lower demand was highlighted in Q1 2023 by slowdown of new residential deliveries. Only 4,666 homes were delivered in Q1 2023, down 16% compared to the same period last year.
