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Real estate: End of year could bring along relaunch of real estate transactions

Real estate in Romania was characterised, in the first 6 months of the year, by the buyers' pridence, with minor adjustments of transaction prices, but the end of 2023 could be marked by a slight amendment of the number of purchases, in thecontext of dropping inflation, according to an analysis. In the opinion of Oriol Casellas Deig, general manager of Meta Estate Trust, a real estate company, inflaiton dropping will encourage the local real estate market by reducing interest rates for mortgage credits and resuming real estate transactions, company real estate analysts say.


Easy access to credits will bring back confidence and will stimulate demand for house purchases, considering that there is a strong property culture and a real need of new houses in the local market.


The reduction of transactions in the first part of the year has not yet generated a drop of housing prices, according to Oriol Casellas Deig. Since building materials had high costs in previous years, price reduction for developers is difficult and we might see that in certain projects, especially those with bank financing which must be paud back in the next period.


Another stress factor for the real estate market is the VAT share applicable for houses smaller than 120 sq.m., initially, by reducing the streshold for which 5% VAT could be applied (from 700,000 to 600,000 lei early this year) and then by discussions concerning the increase of VAT to 9% for the same conditions.


This change will increase pressure on those who need lodging and will determine a reduction of the build area by developers in order to create products fit for the buyers' budgets.


Despite these challenges, the housing need will persist, but purchase demand will grow again once interest rates will drop.


The representative of Meta Estate Trust considers that, on a long run, the real estate market will know more changes. The bettering of the housing stock is an urgent need in Romania, considering the present character of the housing fund, which is dominated by small, old houses and overcrowded areas. These aspects are a great opportunity for the real estate market in the future, especially since Romania is among countries with the lowest levels of financial effort needed to buy a house in EU.


In conclusion, the real estate market in Romania is in a stabilizing stage in point of housing prices, while buyers are being more cautious, which leads to a drop of the number of transactions. However, there are premises for future development. Once inflation and mortgage interest rates drop and the housing stock in Romania develops and improves, there are favorabloe opportunities for investors who pay attention to key moments in the development of this segment.


Since August 29, 2022, Meta Estate Trust has been present in AeRO market of Bucharest Stock Exchange, with the symbol MET. Since its setting up to the present, Meta Estate Trust has invested over 24 million euros in 25 real estate projects, having a total exit of 8 of them until now.