Romanian Housing Price Should Drop Until 2H 2011 - Evaluators

Romanian housing prices will continue to decrease slightly in the first half of the year and will stabilize in the second half, according to evaluation firm Darian.

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Company representatives said they expect foreclosures to continue this year, which, coupled with more relaxed financing conditions, should ease real estate transactions this year.

The liquidation of real estate guarantees on non-performing loans, which will allow investment funds to buy these loans in bulk, will be another phenomenon noted in the market this year, Darian added.

"An important moment this year will be the connection between non-performing loan sales and the restart of lending. Those who buy foreclosed property need financing," said Adrian Crivii, Darian president.

He explained that, so far, banks avoided selling non-performing portfolios and sought every way possible to prevent foreclosures.

In his opinion, the real estate market will recover when supply starts to dwindle, since the number of residential projects launched over the past two years was very low.

Darian conducted a study of the real estate market in 27 Romanian cities, which revealed an average 10% decrease in housing prices in 2010 compared to 2009.

As such, the average price of a used apartment reaches some EUR774 per square meter, while new flats cost EUR846 per square meter.

On the used apartments market, the greatest price decreases were noted in one-, two- and and three-room flats, namely 11%, while prices for four-room flats dropped 10% on average. Rents on this segment dropped an average 12% in 2010.

New studio flats registered a 10% decrease in price, while other types of new flats had their prices go down 9% on average.

Darian was founded 20 years ago and it has 60 employees, active on the evaluation market. Last year, the company posted sales of 11.12 million lei (EUR1=RON4.2568), up 8% on the previous year.

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