The tone in real estate will be given by foreclosures
This article was published on 30.09.2010
Last week on 23rd of September, 2010 I gave an interview for Curierul National where I spoke about the real estate trend as well as about foreclosures . Please see below this interview.
Author: Diana State
The trend started in 2010 and will increase in 2011
Although the requested prices are high, the transactions performed are made at levels ranging close to those of foreclosures
Papageorgiadis: The sector will remain "frozen" because too many are trying to keep up the artificial prices
In 2010 the real estate market is still a blocked one, and we can see that, it is a less dynamic sector, described by few transactions, where is a significant difference between the requested prices and the transactioned ones. In addition, a new trend appeared at the beginning of this year andbecome dominant: quotations from foreclosures are found also in market transactions.
According to experts in 2011, this phenomenon will further increase. "In 2011 we will experience a period of foreclosures. Already, banks have serious problems with actives recovered from non performing loans. However, except small apartments, commercial spaces, land or buildings, we see accomplished transactions at very low prices, close to those of foreclosures. This will be the trend for 2011, combined with many more foreclosures initiated by banks, "said for Curierul National, Ilias Papageorgiadis CEO of More Real Estate Services. According to the representative of More, this trend can be changed only if the state will help the banks to increase their cash flow, as it happened all over in Europe (but so far it does not look like a possible scenario). Ilias Papageorgiadis wanted to clarify that he knows several cases of foreclosures occurred in 2010 and even more will follow until the end of the year, so it is clear that this is the main direction of the market in 2011.
Next year will be even worse this one
The real estate collapse in 2008 brought price adjustments on the market and this continues also today. Specialists state, that the market will stabilize when the prices will reach a minimum level. In this case, the real estate market may follow one of two options: either this sector will rebound (point at which we can say that the local market has experienced a recession in V), or it will fail again after a slight increase, which is translated into a W recession. And the second scenario seems most likely due to the negative signals coming from both external markets and local one.
One thing you require and you pay something else
At this point we cannot say that the prices have reached a minimum level, because the local real estate market is still divided into two categories: first, in which we talk about the actual transaction prices (which are very small) and the second one about the prices requested, and between these two categories there is a huge difference in price. For the second category there is place for prices to fall as it includes prices higher than the buyers are willing to pay. "2010 provided us with new feedback: Romania needs more action, because the problems are getting worse every month. At the same time, the whole world still has problems, Europe and USA being the first, ready to face the W recession. Afterwards I expect a growth of problems and 2011 will be a worse year than this one, "said Ilias Papageorgiadis
Real Estate Market in 2010, still blocked
In 2010, the real estate market is still "frozen" because too many people have tried everything they could to keep the artificial price levels. "But the transactions occurred took place at prices the customer was willing to pay. If the current prices would be those stipulated in the contract, then yes, we would get to reality. But there are not so many properties offered at this price. Every 3 -4 months, people read in the media that "the crisis will end soon." Given this fact they delay their decisions, hoping to return at the level of 2007-2008. But this time is history. We will see that requested prices will fall in 2011, reaching their actual values, " explained Ilias Papageorgiadis.
Less transactions
Following a survey of magazinuldecase.ro from 27,525 owners who have posted ads on this site only 955 managed to sell their properties, just one from 29 vendors was able to conclude the transaction. According to the data provided by the National Union of Notaries Public from Romania (UNNPR) in the first six months of 2007 were concluded 227,235 transactions, in H1 2008 the number of transactions increased to 249,797, while in H1 2009 the transaction volume was adjusted to 162 724 in 2010. And in January-July 2009 were concluded 195,491 transactions.
Why do some people try to take back the advances paid?
– The developer delayed the delivery.
– They realized that they cannot afford the property they wanted as it is too expensive.
– They saw that their incomes being lowered.
– They have doubts about the quality of construction, the finishing.
– They see the prices going down and they don't want to pay the initial high price at which they signed.