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Real Estate: Record sales on Romania's residential property market in July, with reduced VAT rate
Romania's residential property market experienced a strong acceleration in July, recording record apartment sales both in Bucharest and other major cities, with the surge in buyer activity having been driven by the removal of the reduced VAT rate and the increase in the standard VAT rate from 19% to 21%, which took effect on 1 August.
According to a real estate consultancy company, just over 5,000 apartments were sold in the capital, marking the third-best performance in the past two and a half years, with nearly half of all transactions concentrated in Sectors 3 and 6, confirming these areas as key residential development hubs. In Cluj-Napoca, July saw over 1,000 transactions, the highest level in the past three and a half years, confirming the upward trend in the local market.
An analysis by Colliers shows that, in the first seven months of 2025, differences between major cities are evident: Bucharest saw a 7% decline compared to the same period in 2024, Timisoara was down 3%, and Iasi dropped by 25%, while Cluj-Napoca posted a solid 14% increase. At the national level, the market remains almost unchanged from last year, consultants note.
In addition to the transactions officially recorded in July, numerous pre-contracts were signed before 1 August 2025, allowing buyers to secure the application of the reduced VAT rate. Under current regulations, these transactions may still benefit from the tax relief if the property is delivered before 1 August 2026.
'Essentially, this mechanism created a window of opportunity for both buyers and developers, speeding up negotiations and deal closings ahead of the deadline to avoid the additional costs from the VAT hike. Traditionally, sales peaks occurred in December, as buyers and developers rushed to finalise deals before new legislation took effect on 1 January. This time, however, the rules changed mid-year, and the market had to adapt quickly. This shift in timing generated a sudden wave of interest and significantly accelerated transaction volumes, demonstrating the market's ability to respond swiftly to new fiscal conditions,' explained Gabriel Blanita, Associate Director | Valuation & Advisory Services at Colliers Romania, as quoted in a press release.
In July, most buyers were individuals purchasing for personal use, rather than investors, given that, since 2023, the law has allowed only one property to be bought with reduced VAT. Those who had already benefited from this facility had no real reason to rush a second purchase before 1 August, according to the research.
Real estate consultants warn that the increase in the standard VAT rate will place upward pressure on prices in the near future. However, the actual impact will depend on the balance between supply and demand. Ultimately, the market will determine how much of the extra cost developers will absorb by reducing profit margins and how much will be passed on to buyers through higher prices.
Some developers have announced they will partially or even fully cover the VAT increase, at least until the end of the year, in order to maintain project appeal and sales momentum. Nonetheless, experts caution that July's spectacular peak may be the last in the short term. New fees, higher taxes and a slowing economy will put pressure on demand. In this context, the final purchase price and total maintenance costs, influenced by energy bills and increased property taxes, will weigh more heavily in buyers' decisions between buying and renting, potentially making them more cautious.
Colliers is one of the global leaders in real estate consultancy and investment management services, with annual revenues nearing USD 5 billion, a team of 24,000 professionals, and over USD 100 billion in assets under management.