Prices of new homes in Romania will fall this year due to lower demand as loan conditions have tightened, but more people will be looking to rent instead and this is leading to an increase in prices this year, according to an analysis by JLL Romania.
At the end of 2022, rents for new apartments increased by an average of 8.5% over a 12-month period, while old apartments increased by 6.1% over the same period. Rent growth was more pronounced for large apartments (3-4 rooms) in the new market, while rent for small units (1-2 rooms) was up for the old stock.
This trend can be explained by the decrease in the supply of large rental apartments, as in recent years the preferred products for small investors were small apartments, which are brought into the rental market after purchase. Once rents rise, they are likely to remain at this level, added JLL’s experts.
"Developments in the mortgage market have a major impact on the residential market. Most likely, house prices will continue to fall slightly over the next half year in this context. However, we expect prices to gradually return to previous levels over the medium term as the credit market rebalances,” said Andreea Hamza, Senior Director Living at JLL Romania.
The agency’s experts suggested that Romania’s rent movements are pointing to development of the PRS niche.
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