Romania´s economy grew strong from 2001 to 2008, with an average annual real GDP growth rate of 6.5%, according to the IMF.
Thereby, property prices and demand rose in anticipation of EU accession, which took place in January 2007. But investors were disappointed by non-implementation of economic and political reforms which had been promised as part of EU accession conditions. Corruption remained largely ignored (or tolerated) by the government.
Then came the Euro-crisis. GDP plunged by 7.1% in 2009 and fell by another 0.8% in 2010:
- In 2009, house prices plunged by 20.62% (-24.22% inflation-adjusted) from a year earlier.
- In 2010, house prices fell by 15.88% (-22.08% inflation-adjusted) from a year earlier.
- In 2011, house prices dropped again by 4.07% (-6.99% inflation-adjusted) from the previous year.
- In 2012, house prices fell by 1.31% (-5.96% inflation-adjusted) from a year earlier.
- In 2013, house prices fell by 8.18% (-10.43% inflation-adjusted) from a year earlier.
- In 2014, house prices dropped 0.78% (-1.78% inflation-adjusted) from a year earlier.
All together, property prices fell by more than 56% from 2008 to 2013 due to the adverse impact of the global economic downturn and the ensuing Euro-crisis.
The comeback of housing in Romania started early 2014. The key rate was reduced several times since 2014 and the interest rates for long-term RON-denominated mortgages are very low.
- 1 year housing loan interest rates averaged 8.64%, up from 8.32% a year ago but down from 12.06% in 2009-10.
- 1-5 year interest rate fixation (IRF) loans averaged 5.71%, down from 6.8% a year earlier and from an average of 13.13% in 2009-10.
- 5 year IRF housing loans and over averaged 3.96%, down from 5.08% a year earlier and from 10.93% in 2009-10.
Interest rates have likewise fallen on euro-denominated housing loans, which were 61% of all housing loans outstanding.
With low interest rates and improving economic conditions, house prices are rising robustly again. Demand is picking up. Residential construction activity is improving across the country in 2015.
- In Bucharest the average selling price of apartments rose by 3% to €1,086 per square meter.
- In Cluj-Napoca, apartment price soared by 12.4% to €1,124 per sqm.
- In Timisoara, the average selling price of apartments surged by 10.8% to €923 per sqm.
- In Brasov, the average selling price of apartments rose by 2.5%, to €861 per sqm.
- In Constanta, the country’s oldest city, apartment prices rose by 7.2% to €907 per sqm.
Source: global property report
Cluj-Napoca´s double-digit house price increases in 2015 are due to strong demand from working residents, expatriates, and students. The city is becoming Romania´s manufacturing and economic hub, and is home to the country’s largest university.