The agency has signed 20 percent more rental contracts in 2008 over 2007. The rise is due in part to the seasonal nature of the rental market, as September and October are generally the busiest months of the year.
“But this fall, many people who had formerly planned to buy a house have decided to rent instead due to the lack of bank loans,” said Ghimpau. Also, according to the study, the uncertain situation on the real estate market has persuaded potential first-time buyers to wait and see how the market goes, choosing to rent a home instead of taking the more drastic decision to buy one. The lack of certainty regarding the implementation of the Central Bank's new rules and the international capital market crisis have led to a decreasing residential market for the third month in a row, according to the Colliers' monthly sales price study Bucharest Real Estate Index (BREI) for October. The index showed a 3 percent general decrease in the BREI indicator. The new apartment marker registered no change, as the asking prices of new projects have been steady for the last six months.
The old apartments market saw a reduction to EUR 1,576 per sqm, taking prices back to levels last seen in October 2007, Colliers found. This meant a 6 percent decrease from the month before and a 16 percent fall since the beginning of 2008.
The drop is most pronounced in the sixth district of Bucharest, where prices have plunged 13 percent since September, reaching an average sale price of EUR 1,310 per sqm. Prices have been most stable in district two.
According to Coldwell, the falling trend on the local real estate market is in part due to the general background of the international financial crisis, which has made access to credit more difficult and more expensive, but also has roots in the local market.
The study found that the previous real estate fervor resulted in many residential projects that did not take into consideration local purchasing power, real demand coming from end-users and the link between the customer and the targeted market segment. This speculation sent prices rocketing, Coldwell says, adding that such speculative investments created a false absorption mood on the market and also led to developers being able to access financing too easily.
Real estate specialists identify two effects on the short and medium term: more expensive leasing transactions and greater choosiness from tenants.
The agency also found that the developers that find themselves in the position of not being able to sell the completed units within their projects will instead rent them out. This will result in a further drop in apartment prices, and a higher number of old apartments available to rent.