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Real estate prices, in decline

The real estate market in Romania is at a turning point, found a Capital weekly analysis, in which the profit margins are narrowing and the speculative investors are focusing on other directions, and the home prices have stopped going up.

Experts do not speak about a crisis but the market's becoming mature. The potential clients have become much more demanding and, in addition to price, the selection criteria are related to quality and area where the home is situated. Another sign of maturity is given by the value of the transactions with big projects. This year, only three major deals have taken place, whose value has neared 600 million euro. The specialists consider the time of 100% profit is over. Developers are expecting now profits of 20%-25%. In this context, the small investors will make room for the big, institutional ones, especially investment funds or foreign developers that are backed by some investment funds. The land price affects all the market's segments. The analysts of Cushman & Wakefield consider the price of land on the outskirts of Bucharest will decline in the next months by 5-10%. Practically, many developers have entered a vicious circle to which they contributed. They are building at increasingly bigger costs that they can o longer cover through price rises since prices are already too high. Although incomes have risen in the past years, they are in most cases insufficient for home purchases even made on credit. Maximum 100,000 Romanians can take a mortgage loan, the studies conducted by the consultancy companies have found. Even in this context, the clients' reactions are often emotional. Eager to become homeowners at any cost, they accepted in the past outrageous conditions and prices that have led to the present situation. Sursa: http://www.rompress.ro

Tags: prices euro

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