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We just entered the 4th<\/sup> year of crisis and tens of people keep on asking me about the price of old apartments. The question is usually “what will happen with the prices of old apartments during the following 6 months?” Especially after the new norms issued by BNR, this discussion has become one of the most popular ones, all around the country. <\/p>\n The prices of old apartments will fall. A bit or a bit more<\/strong><\/p>\n I personally believe that the new situation will force the prices of old apartments to decrease. In some categories of properties, the decrease this fall will be small (2 – 3%), but in some others I expect it to be higher, even to exceed 7 – 8%. I always refer to the prices of transactions, not the asking ones “Why is that?” you will ask me. Let us look at some reasons…<\/p>\n The State started its withdraw from the Real Estate market. “Prima Casa” has less guarantees<\/strong><\/p>\n “Prima Casa” was a clear intervention by the Romanian State, which “protected” the owners of properties, especially the old ones. The State guaranteed the loans and banks lent money to people, being sure that the State will pay them (not the people). This is not a procedure that can last forever. This is why we all know that the State reduced its guarantee to 30.000 Euro. This change will also affect the prices of old apartments, as buyers will have less available resources to invest in a property.<\/p>\n Stricter rules by BNR: Fewer loans approved<\/strong><\/p>\n BNR intervened in the Real Estate market by imposing new, stricter measures for loans and buying of a property. With the exception of “Prima Casa” (where the advance payment is just 5%), the advance increases to 15% for lei and 30% for Euro. With “Prima Casa” being changed, these rules will make the situation more difficult for someone looking to obtain a credit and buy a property.<\/p>\n More difficult = less clients<\/p>\n Less clients = lower offered prices<\/p>\n Lower offered prices = either you accept them, or you wait hoping for better times in the future<\/p>\n (PS. I agree with Mr Isarescu’s strategy on these stricter rules, by the way).<\/p>\n Strong demand, lower purchasing power<\/strong><\/p>\n I have discussed with numerous people who are involved in real estate ads sites. They have confirmed that the demand now is the strongest one since 2007, but at the same time they noticed that the prices that people target are much lower than the asking ones. The situation is something like this:<\/p>\n Too much supply<\/p>\n Too much “room” for negotiations<\/p>\n Too much demand<\/p>\n The cost of life will continue increasing<\/strong><\/p>\n As life will be more expensive this winter, lots of people will be forced to sell at lower levels, in order to cover their obligations.<\/p>\n Old apartments (unfortunately) involve many unserious people = No value is added<\/strong><\/p>\n · The majority of old apartments belong to owners that (usually) do not have all the property papers in order.<\/p>\n · It is also rare to find people wise enough, who invest 2.000 – 3.000 Euro in their property, in order to raise the value by an extra 7.000 – 8.000.<\/p>\n · Also, everyone agrees that about half of the transactions are sealed without the presence of an expert consultant.<\/p>\n · Plus when consultants are involved, unfortunately more than half of them are not “the most serious people in the world”. They do not promote the properties properly, they search only for the highest (and easiest) commission.<\/p>\n So all the above 4 reasons make it clear that the majority of old apartments are sold based only on price. Nothing else matters. So in a crisis period with the loan process being more difficult, this price will fall.<\/strong><\/p>\n “Yes, but in the beginning of the year we will watch too many people saying that we’re done with the crisis again.” you might say.<\/strong><\/p>\n They can even say that Romania is richer than Germany. It is your mistake if you believe them.<\/p>\n “Why do you speak only about the period until Easter?”<\/strong><\/p>\n Because there is a strong possibility that the Romanian government will try to open all European grants in the following six months. (I remind you that the vast majority of funds are not absorbed and 2013 ends in just 26 months from now). This means that the market will see its liquidity rising by Easter. This might have a positive impact on the prices as well (or it might simply stop the decline of the price). But it is too early to speak about it.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" We just entered the 4th year of crisis and tens of people keep on asking me about the price of old apartments. 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