Romanian Property News

It is at least risky to make any assumptions about the future when it comes to the (Romanian) property market, as prices are still quite dynamic. In fact, looking over at the UK housing market, very few people could predict 5-10 years ago that prices will increase 3-5 times. What it can be done though is to look back at how the prices evolve and use the data to make a (better) informed decision.

When talking about the housing market, the easiest to discuss are the studio flats. Firstly, they are likely to be more appealing for the buy-to-let market, rainging from students up to young people/couples looking into buying a property and not having yet enough money for it. Secondly, they are cheaper than any of the others, so more convenient for small investors. Thirdly, with prices escalating, studio flats are still afordable, both as an investment as well as a a home.

As both the property market and the buy-to-let market have a slower uptake outside the capital, we will talk, once again, about studio flats in the Bucharest area. So, coming back to the title, let’s see the evolution of prices for studio flats in Bucharest over the last year. The data below is based on comparing the offers on the Bucharest housing market from end of May 2006 with the housing market at the end of May 2007. The devil is in the detail, so the prices were aggregated only on areas, rather than overall for Bucharest.

Starting from a total of around 1000 offers on both dates, the areas with no offers on either date were removed, as well as areas with too few offers (less than five) in 2007. To cut a long story short, the results are given below:

The best performing area was 1 Mai (obeying the Romanian spelling), with a substantial 68% increase in studio flats prices over the past year. With such an increase, no wonder that the number of offers doubled from last year (apologies, could not fit all the columns in the article). But it is very easy to influence figures; with only 9 studio flats on offer in the May 2007 data, it was enough to have one of them boldly priced at 110k in order to push the average by nearly €5000. That is not the case though with the second place, Avrig – with a similar number of offers in both cases (5-6), the prices in the area still increased by 63%, with no exaggerated prices on either side. In fact, the difference between the cheapest and the most expensive flat for both dates was the same: around €12k-13k. On the last place, with a modest 11%, was the Oltenitei area, positioned at the outskirts of Bucharest.

What about the Bucharest areas with the most studio flats for sale? Drumul Taberei was the leader, with no less than 140 offers in 2007. With double the numbers from 2006 (71 studio flats up for sale), the area showed good overall stability, with a standard deviation (variable that measures the amount of variation from average) of around €2k-4k in both cases.

I’ll stop here for now and will gather some more data in the following weeks for larger flats, although variations might excessively influence the rankings.