The Real Estate Market Revival
Lots of people are asking now when will the residential sector make its come back. It’s hard to make an estimation of when it will happen, because of the world’s economical situation and our encreased dependence regarding it. This dependence is caused by inefficient economical policies and by the low amount of european founds atrracted in the economy.
It is quite probable that in 2011 Romania will come out of recesion with an increase of about 1.5%. If this optimistic scenario will be confirmed, in 2012 the GDP could go up with about 3% which will prove to be a big consolidation. The GDP increase will have benefits on the incomes of the population, the unemploymenent will be reduced and other good aspects will appear after the inflation will decrease, influencing the financing area. All this will lead to an increase of the solvable request on the residential market especially in the big cities.
Considering that the amount of housings available for sale is quite consistent, although it’s probably 50% lower that in 2008, there are still no significant developing projects that seem to appear. This will put some pressure over the competitive offer in the middle of the next year, which could be reduced only by selling the mortgages behind the nonperforming loans. If these assumptions will turn it will significantly influence the real estate market. It could be possible for the market to reach a limit in the last six months of 2012, which will represent the inflection point in returning to the real estate market growth.
In my opinion the recovery will be slow and it will probably take a decade until we will have some non inflated prices in the real estate market, comparable with those before the economical crisis. What determines me to make these assumptions is the fact that the market will mature, the incomes growth will not exceed productivity, and another wave of cheap money is very unlikely to hit.
Dr. ec. Adrian Crivii, MAA, REV, FRICS