Market in Depth

House price rises decelerating in Romania

Lalaine C. Delmendo | February 22, 2021

Romania's house prices continue to rise, albeit at a slower pace, amidst a struggling economy due to the pandemic. During 2020, the average selling price of apartments in Romania rose modestly by 2.44% y-o-y (0.95% inflation-adjusted) to €1,371 (US$ 1,662) per square metre (sq. m.), a sharp slowdown from an annual growth of 8.23% in 2019, based on the figures from It is the weakest growth since 2014.

On a quarterly basis, nationwide house prices rose by 5.14% (4.98% inflation-adjusted) in Q4 2020.

Romania's economy is estimated to have contracted by only 5.2% in 2020, based on the European Commission's forecast, following y-o-y expansions of 4.2% in 2019, 4.4% in 2018, 7.1% in 2017 and 4.8% in 2016. The economy is projected to grow by 3.3% this year.

Nevertheless all major cities in the country reflect the nationwide trend of decelerating house price growth during 2020:
  • In Bucharest the average selling price of apartments rose by a meager 0.85% (-0.42% inflation-adjusted) y-o-y to €1,425 (US$ 1,727) per sq. m, a sharp slowdown from the previous year's 5.84% growth.
  • Cluj-Napoca, Romania's fourth most populous city, saw the biggest y-o-y increase in apartment prices of 7.48% (6.13% inflation-adjusted) to an average of €1,840 (US$2,230) per sq. m. Though it is still lower than 2019's increase of 10.1%.
  • In Brasov, the average selling price of apartments rose by 4.92% (3.61% inflation-adjusted) to €1,236 (US$1,498) per sq. m, down from the previous year's 6.9% rise.
  • In Constanta, the country's oldest city, apartment prices rose by 2.48% (1.19% inflation-adjusted) to €1,240 (US$1,503) per sq. m, a sharp slowdown from the previous year's 8.33% rise.
  • In Timisoara, the average selling price of apartments went up by 1.49% (0.22% inflation-adjusted) to €1,292 (US$1,566) per sq. m, also a slowdown from a y-o-y increase of 5.47% in 2019.

Figures from the real estate intelligence platform Analize Imobiliare showed that the demand for residential dwellings in Romania's six biggest cities increased 14% to about 154,500 units in Q3 2020 from the previous quarter, but still down by 12% from a year earlier.

Romania house prices
In the first eleven months of 2020, residential building permits in Romania fell by 4% from a year earlier to 37,781, according to the National Institute of Statistics (INS) – after a slight y-o-y decline of 0.4% in 2019 and annual growth of 2.6% in 2018 and 7.6% in 2017. Likewise, the area of residential building permits issued fell by 3.4% y-o-y to 9.68 million sq. m. in Jan-Nov 2020.

There are no restrictions on foreign nationals acquiring dwellings in Romania. Ownership of land is tricky, but companies incorporated in Romania as well as resident foreign nationals and non-resident EU citizens can acquire land.

Analysis of Romania Residential Property Market »

Rental Yields

Moderate to good rental yields in Bucharest, Romania

Houses and apartments are not expensive in Bucharest, with a range of prices varying from around 950 euros per square metre (sq. m.) to 1,950 euros.

How much can you earn? Bucharest´s rental yields are good, at around 6% to 8%.

Please note that our prices primarily represent well-maintained apartments. We have used the "useful area" instead of the "built area" when we computed for the sq. m. prices because we only included old apartments in our survey. When one buys an old apartment in Bucharest, one buys the useful area. But when a developer sells an apartment, he sells the built surface. Therefore, the buyer becomes co-owner of the conjoint spaces.

Currency risk: over the past four years the Romanian Leu has decline slightly against the euro.

Conclusion: Bucharest is a bargain. In only a few European countries are homes less expensive than in Romania. Even more important, Romanian price to rent ratios are very low. Romania is growing rather rapidly, so there is upside potential. But, well, it very much depends whether you want exposure to Romania given that gross rental yields are good, but not extraordinary.

Round trip transaction costs are moderate in Romania. See our Romania transaction costs analysis and our Residential property transaction costs in Romania compared to other countries.

Read Rental Yields »

Taxes and Costs

Rental income tax is moderate

Rental Income: Net rental income earned by nonresidents is taxed at a flat rate of 10%.

Capital Gains: No tax is levied on the capital gains realized by individuals from selling real property; however transfer tax is levied on the transfer of immovable property in Romania.

Inheritance: Inheritance tax is imposed at regressive rates from 2% to 0.50% depending on the value of the inheritance.

Residents: Residents are taxed on their worldwide income at a flat rate of 10%. Residents may deduct personal allowances and allowances for dependents.

Read Taxes and Costs »

Buying Guide

Buying costs are moderate in Romania

Roundtrip transaction costs, i.e. the total cost of buying and selling a property, are around 7.44% to 16.20% of property value. The greatest cost is the real estate agent’s commission of 6%, half paid by the seller and the other half by the buyer. Stamp duty can reach up to 3%.

Read Buying Guide »

Landlord and Tenant

Romanian law is pro-landlord

Rent: Rents can be freely negotiated. Progressive annual increases can be stipulated in the lease contract.

Tenant Security: The agreement automatically terminates at the end of the contract and no further notice is necessary. The landlord can terminate the lease before the agreed term only if the tenant did not pay rent for three consecutive months and if the tenant did not comply with the contractual provisions.

Read Landlord and Tenant »


Romania’s economy struggling; public finances worsening

Romania’s economy continues to struggle. The European Commission (EC) estimates that the Romanian economy has contracted by 5.2% in 2020, following annual expansions of 4.2% in 2019, 4% in 2018, 7% in 2017, 4.8% in 2016, 3.9% in 2015 and 3.4% in 2014.

The economy is projected to grow by a modest 3.3% this year, based on the EC’s forecast.

Romania’s finance ministry recently revised its budget for the third time envisaging a public deficit of RON 96 billion (€19.8 billion), which is equivalent to 9.1% of 2020’s GDP – worse than its earlier projection of a shortfall of 8.6% of GDP. The EC is even more pessimistic, projecting a deficit of about 10.3% of Romania’s GDP in 2020, up from 2019’s 4.4% shortfall - and the biggest deficit in the country’s recent history.As a result, public debt surged to 46.7% of GDP in 2020, up from just 35.3% of GDP in 2019.

Romania gdp inflation
In an effort to manage the country’s worsening public finances, Romania’s new centre-right government, headed by prime minister Florin Citu, recently unveiled a package which includes measures aimed at achieving a budget deficit of 7% of GDP for 2021 but at the same time continuing support to companies and employees adversely hit by the pandemic.

In November 2020, the seasonally-adjusted unemployment rate was 5.1%, slightly down from 5.3% in the previous month but up from 4% in the same period last year, according to INS. The total number of unemployed persons in Romania increased to 462,000 in November 2020.

Inflation stood at 2.1% in December 2020, sharply down from the prior year’s 4% and the least since September 2017. Thought it remains within the central bank’s target band of 1.5% to 3.5%. Inflation is projected at 2.5% this year, according to the EC.

On December 2020, the Romanian Leu (RON) depreciated again against the euro by almost 2%, reaching an average exchange rate of RON 4.8682 per euro. The currency depreciation is mainly attributed to the rapid deterioration of the country’s trade and current account balance, as well as public finances.

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