Prices on Bucharest’s secondary residential market will remain on a downward trend and could drop by an estimated 20 percent, said Stefan Gheorghiu, general manager of Impact SA during the 12th edition of the Focus on Real Estate event organized by BR this Wednesday.
Prices are still too high given the quality of the units put on sale and owners continue to have unrealistic demands, he explained.
Not everyone agreed with this prediction. Old housing units in Bucharest will continue to be artificially overpriced due to lack of competition which is generated by two main factors – location and size, said Andrew Prelea, president of Ozone Homes.
Most new residential projects are located on the city outskirts and lack proper infrastructure, he explained, stressing the need for the authorities make investments in this direction.”Living 7 km away from the city’s center, in any other capital is not considered living outside the city. But people have bus service, tram service and so on, that allows them to be transported to their location,” he explained.
Moreover, old housing units have smaller living areas than the majority of new apartments built before the crisis in Bucharest and current regulations don’t allow developers to reconfigure already built projects.
“The secondary market carries better locations especially in Bucharest and other larger cities. These apartments also come with the right surfaces that allow people to get a mortgage line,” he said.
Lack of financing remains the main problem for the further development of the residential market but this doesn’t mean that there isn’t need for new housing. It Bucharest alone, this amounts to more than 300,000 units, said Prelea.
“This should be a sellers’ market. Why is it not a sellers’ market? Because of public perception, market confidence and the availability of credit,” he concluded.
While there is a need for more residential developments, future projects will have to be “carried out in a very professional manner – something that hasn’t happened very often so far,” said Gheorghiu.
In Romania, new residential developments represent only about 10 percent of the market, while the secondary market covers the rest, said Ileana Preda, president of the National Association of Realtors from Romania (APAIR). In addition to this, Gheorghiu said that there is also a growing intermediary market, made out of new housing units that haven’t been sold over the past three, four years and this could actually be larger than the primary market itself.