Romania’s housing market rising rapidly

Lalaine C. Delmendo | January 20, 2022

Romania’s house prices are rising rapidly again, amidst the country’s strong economic rebound. In November 2021, the average selling price of apartments in Romania soared 14.8% y-o-y (7.56% inflation-adjusted) to €1,551 (US$ 1,764) per square metre (sq. m), a sharp acceleration from an annual growth of 2.35% in November 2020, based on figures from

All major cities in the country saw accelerating house price growth during the year to November 2021:

  • In Bucharest the average selling price of apartments rose by 13.9% (6.7% inflation-adjusted) y-o-y to €1,594 (US$ 1,813) per sq. m, following a miniscule growth of 0.85% during 2020.
  • Brasov saw the biggest y-o-y increase in apartment prices of 17.4% (10% inflation-adjusted) to an average of €1,445 (US$1,643) per sq. m, a strong acceleration from an increase of 4.9% during 2020.
  • In Cluj-Napoca, Romania’s fourth most populous city, apartment prices rose by 11.5% (4.4% inflation-adjusted) y-o-y to an average of €2,051 (US$2,333) per sq. m, up from a growth of 7.5% in 2020.
  • In Constanta, the country’s oldest city, apartment prices rose by 10.5% (3.5% inflation-adjusted) to €1,384 (US$1,574) per sq. m, sharply up from an increase of 2.5% during 2020.
  • In Timisoara, the average selling price of apartments went up by 6% (-0.7% inflation-adjusted) to €1,364 (US$1,551) per sq. m, following a slight growth of 1.5% in 2020.

“The fact that the local residential market managed to register 12 months of sustained increase in housing prices, in spite of the COVID-19 epidemic, proves that it capitalizes on the population’s solid demand,” said real estate intelligence platform Analize Imobiliare.

Romania house prices

In Q3 2021, the total number of real estate transactions in Romania soared 31% y-o-y to about 186,000 units, following growth of 11.6% during the whole year of 2020, according to the National Agency for Cadastre and Land Registration (NACLR).

Residential construction is also increasing again. In the first ten months of 2021, the total number of residential building permits in Romania rose strongly by 25.3% from a year earlier to 43,374, according to the National Institute of Statistics (INS) – after falling by 2.9% in 2020 and 0.4% in 2019. Likewise, the area of residential building permits issued increased 14.1% y-o-y to 10.09 million sq. m in Jan-Oct 2021.

Both the European Commission and the International Monetary Fund (IMF) expect that Romania’s economy will grow strongly by 7% this year, fully offsetting the 3.9% decline seen during 2020 amidst the coronavirus pandemic.

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.

History: Romania’s great housing bust and recovery

Romania’s economy grew robustly from 2001 to 2008, with an average annual GDP growth rate of 6.6%, according to the IMF. Property prices and demand rose in anticipation of EU accession, which took place in January 2007. But investors were disappointed by non-implementation of economic and political reforms, which had been promised as part of EU accession conditions. Corruption remained rife, largely tolerated by the government.

Then came the euro-crisis. Romania’s GDP plunged by 5.5% in 2009 and fell by another 3.9% in 2010. House prices plunged by 20.62% (-24.18% inflation-adjusted) y-o-y in 2009 and by another 15.88% (-22.07% inflation-adjusted) in 2010. The housing market remained depressed for the next four years, with prices falling every year from 2011 to 2014.

Overall, house prices fell by more than 57% from 2008 to 2014.

The housing market started to recover in 2015, with prices rising by 6.73% (7.46% inflation-adjusted) from a year earlier, thanks to improving economic conditions. The housing market has continued to strengthen since then, with house prices surging by 10.41% (10.51% inflation-adjusted) in 2016, by 10.86% (8.06% inflation-adjusted) in 2017, by 6.44% (3.32% inflation-adjusted) in 2018 and by another 8.23% (4.02% inflation-adjusted) in 2019.

However due to the COVID-19 pandemic, which has adversely impacted Romania’s overall economy, house price growth slowed sharply to 2.24% in 2020 (less than 1% when adjusted for inflation).


Year Nominal Inflation-adjusted
2009 -20.62 -24.18
2010 -15.88 -22.07
2011 -4.07 -7.02
2012 -1.31 -5.62
2013 -8.18 -9.37
2014 -0.78 -1.80
2015 6.73 7.46
2016 10.41 10.51
2017 10.86 8.06
2018 6.44 3.32
2019 8.23 4.02
2020 2.24 0.39
Sources:, Global Property Guide

Residential sales transactions surging

In Q3 2021, the total number of real estate transactions in Romania soared 31% y-o-y to about 186,000 units, following growth of 11.6% during the whole year of 2020, according to the National Agency for Cadastre and Land Registration (NACLR).

Yet in Romania’s six biggest cities, demand for residential dwellings has been more or less steady. In Q3 2021, about 152,200 potential buyers searched for housing in the country’s major regional centres, up 0.4% from the previous quarter but down 1% a year earlier, according to the real estate intelligence platform Analize Imobiliare.

Over the same period (figures from Analize Imobiliare):

  • In Bucharest, demand for houses and apartments was 85,500 units, down 2.8% q-o-q but unchanged from a year ago
  • In Timisoara, demand stood at 14,600 units, up 1.4% q-o-q but down 5% y-o-y
  • In Brasov, demand was 13,700 units, up 5.4% q-o-q but unchanged from a year earlier
  • In Cluj-Napoca, demand was 13,500 units, up 5.5% q-o-q and 3% y-o-y
  • In Constanta, total demand was 12,800 units, down 0.4% q-o-q and by 12% y-o-y
  • In Iasi, demand was 12,200 units, up 14.7% q-o-q but down 2% y-o-y

Residential construction rising again

In the first ten months of 2021, the total number of residential building permits in Romania rose strongly by 25.3% from a year earlier to 43,374, according to the National Institute of Statistics (INS) – after falling by 2.9% in 2020 and 0.4% in 2019. Likewise, the area of residential building permits issued increased 14.1% y-o-y to 10.09 million sq. m in Jan-Oct 2021.

By region:

  • Bucharest-Ilfov saw the biggest y-o-y rise in residential building permits of 46.5% y-o-y to 5,669 units in the first ten months of 2021
  • In the Southeast, permits rose by 16% y-o-y to 4,625 units
  • At the Central region, permits rose strongly by 31% y-o-y to 4,059 units
  • In Southwest Oltenia, permits increased 24.1% y-o-y to 3,363 units
  • In the Northwest, permits were up by 16.6% y-o-y to 6,538 units
  • In the Northeast, permits rose by 16.6% y-o-y to 7,890 units
  • In South Muntenia, permits surged 30.7% y-o-y to 6,903 units

Romania residential building permits

During 2020, dwelling completions increased slightly by 0.5% to 67,816 units, following annual rises of 13% in 2019, 11.9% in 2018, 2.2% in 2017 and 11.1% in 2016, according to the INS.

Romania dwelling stock completions

Dwelling stock stood at 9.16 million in 2020, up slightly by 0.7% from a year earlier.

Key rate rising, but mortgage rates continue to fall

The National Bank of Romania (NBR) raised its policy rate by 25 basis points to 1.75% in November 2021, amidst increasing inflationary pressures. The deposit facility rate was kept at 1% while the lending facility rate was raised by 50 basis points to 2.5%.

Despite this, mortgage rates continue to fall.

Interest rates on new RON-denominated housing loans:

  • Floating rate and up to 1 year initial rate fixation (IRF): 3.57% in November 2021, down from 4.81% a year ago
  • Over 1 and up to 5 years IRF: 4.12%, down from 5.27% a year earlier
  • Over 5 and up to 10 years IRF: 4.26%, slightly up from 4.18% a year earlier
  • Over 10 years IRF: 3.84% in November 2021, down from last year’s 4.9%

For outstanding loans:

  • Up to 1 year maturity: 4.61% in November 2021, slightly down from 4.64% a year ago
  • Over 1 and up to 5 years maturity: 4.2%, down from 4.99% a year ago
  • Over 5 years maturity: 4.19%, down from last year’s 4.77%

Romania interest rates ron denominated housing loans

For euro-denominated loans, the average interest rate for those with 1-5 years maturity was 3.3% in November 2021, sharply down from 4.27% a year earlier and 5.42% two years ago, according to the BNR. Likewise, interest rates for loans with over 5 years maturity fell slightly to 3.54% from 3.65% a year ago.

Romania interest rates eur denominated housing loans

Almost 81% of outstanding housing loans were RON-denominated in November 2021, up from 76% a year earlier and a huge increase from just 5.5% from 2010 to 2013. Euro-denominated loans accounted for 17.8% of outstanding housing loans in November 2021. The Central Bank has shifted homebuyers’ preferences to local currency by limiting the “Prima Casa” and “Noua Casa” programmes to RON-denominated loans.

The mortgage market continues to grow

Romania’s mortgage market remains small by international standards, at just about 8.4% of GDP in 2021. However from 2008 to 2021 housing loans outstanding have grown by more than 15% annually.

It might have been expected that mortgage growth would have been stalled by the passage, in early 2016, of the “Legea darii in plata” law, allowing a borrower to close his mortgage debt by handing back his property to the bank, with no other obligations. However mortgage growth has not stalled. Housing loans still rose strongly by 12.5% in 2016, 13.2% in 2017, 11.1% in 2018, 10.5% in 2019 and 9.9% in 2020.

And despite the coronavirus crisis, housing loans outstanding increased 13.1% y-o-y to RON 99.74 billion (US$ 22.84 billion) in November 2021, according to the National Bank of Romania.

The mortgage market’s strong growth has been buoyed by the government’s “Prima Casa” (First Home) programme, launched in May 2009, which supports first home purchasers who have not previously had a mortgage.

Romania house loans

The government guarantees 80% of the value of the loan, up to a maximum credit amount of 60,000 euros, and there is no age limit for the beneficiaries. The credit period is 10-30 years. Accepted earnings are the standard accepted by banks: earnings from salaries, pensions, copyrights, life annuities, dividends, and earnings from independent activities, but not rental income.

Since the program was launched in 2009, the state has granted about 300,000 guarantees to Romanian beneficiaries.

Recently, the Prima Casa was replaced by “Noua Casa” (New House) Program. The maximum amount of loan that can be granted under the program for 2021 is EUR 66,500. For new houses priced below EUR 70,000, the minimum downpayment is 5% while for houses priced between EUR 70,000 and EUR 140,000, a downpayment of at least 15% is required. The interest rate is variable, computed based on the Consumer Credit Reference Index (IRCC) plus a fixed margin of up to 2%.

In 2021, the Noua Casa programme received a budget of about RON 1.5 billion (US$343.25 million) – an amount that could benefit 18,000 beneficiaries – in an effort to boost mortgage lending especially to young families wanting to buy their first property. It was implemented through fifteen banks: BRD-GSG, BCR, Banca Transilvania, CEC Bank, ING Bank, Raiffeisen Bank, OTP Bank, Banca Romaneasca, Unicredit Bank, Garanti Bank, First Bank, Vista Bank, Intesa Sanpaolo Bank and Alpha Bank.

Rental yields in Bucharest are good

Gross rental yields for apartments in Bucharest are good, ranging from 6% to 8%, with smaller apartments having the highest rental returns, according to Global Property Guide research.

A 70 sq. m. apartment in Bucharest can be rented for around €550 (US$ 665) per month, while a 120 sq. m. apartment can be rented for just under a thousand euro per month.

Romania exchange rate

Romania is a nation of homeowners, with a homeownership rate of almost 96% in 2020, according to figures from Eurostat. Government policies encourage families to buy their own houses:

  • For first-time homebuyers, the government extends a state guarantee of 50% to banks, up to €60,000;
  • VAT on properties with an area of ​​up to 120 square metres is reduced to 5%.

Romania’s total dwelling stock was about 9.16 million units last year, about 15% larger than in 2000, according to the INS.

Romania’s economy recovering; inflation soaring

In Q3 2021, Romania’s economy grew by 7.4% from a year earlier, following a y-o-y expansion of 13.9% in Q2 and a slight contraction of 0.2% in Q1. As a result, both the European Commission and the International Monetary Fund (IMF) projects Romania’s economy to grow strongly by 7% this year, fully offsetting the 3.9% decline seen during 2020 amidst the coronavirus pandemic.

The economy grew by an annual average of almost 4% from 2011 to 2019.

Romania gdp inflation

Romania’s budget deficit surged to 9.4% of GDP in 2020 – a sharp increase from a shortfall of 4.4% of GDP in 2019 and the biggest deficit in the country’s recent history. The deficit is expected to fall slightly to 8% of GDP this year and to 6.9% in 2022, according to the European Commission. Public debt is projected to increase further to about 49.3% of GDP this year, from 47.4% in 2020 and just 35.3% in 2019.

In October 2021, the seasonally-adjusted unemployment rate was 5.3%, unchanged from a year earlier, according to INS. Inflation soared to 7.94% in October 2021, far from the average of 2.8% in 2010-2020 and the highest level recorded in over a decade.

Romania unemployment

In the past two years, the Romanian Leu (RON) depreciated again against the euro by 3.5%, reaching an average exchange rate of RON 4.9506 per euro. The recent decline in the currency’s value is mainly attributed to domestic political instability and the continued fears on the global financial markets caused by the pandemic.

Political uncertainty, widespread corruption

Romania is poised between future and past. Does Romania want to be a modern state, in which politicians are elected on the basis of policies and are prosecuted and imprisoned for corruption? Or does it want to be a clientilist state, in which politics is about who you accept money from?

The two most prominent voices of the progressive future are President Klaus Iohannis, elected in November 2014, and Laura Codruta Kovesi, former head of the country’s National Anticorruption Directorate (DNA).

Iohannis was elected President in November 2014 on an anti-corruption platform. After Iohannis’ election there were a series of arrests for corruption, and increased support for the DNA, which charged many politicians, media moguls, judges and businesspeople.

However progress was set back by the Social Democratic Party’s (PSD) triumph in the December 11, 2016 Parliamentary elections. The PSD’s support is strong among the poor, whose perception is that almost all Romanian politicians are tainted, so why seemingly target the PSD?

The PSD appointed the relatively clean Sorin Grindeanu as Prime Minister. But the real power was the PSD’s Liviu Dragnea, convicted of bribery and ballot-forging during the 2012 parliamentary election and thus barred by law from becoming prime minister. One of the Grindeanu government’s first steps was to pass Emergency Ordinance 13, effectively decriminalising official misconduct in which the financial damage is less than 200,000 lei - clearly a step towards Dragnea becoming prime minister.

This unleashed a storm of popular protest and mass demonstrations. The demonstrations had their effect. Ordinance 13 was repealed and justice minister Florin Iordache resigned, a scapegoat for Ordinance 13.

However on December 2017, a group of PSD senators and deputies submitted another draft bill setting lower penalties for corruption offenses and decriminalizing some of them. Similar to Ordinance 13, the draft bill suggested decriminalizing abuse of office with financial damage worth EUR 200,000 and below, and also proposed that perpetrators should serve only three years of jail time, and those with severe illness or who were over 60 years old should be allowed to serve their sentences at home.

Just six months after becoming a premier, Grindeanu was ousted in a no-confidence vote with the PSD and its coalition partner ALDE in June 2017. Grindeanu was reluctant to resign, accusing Dragnea of seeking to “concentrate all the power in his hands”. In June 2017, former Economy Minister Mihai Tudose took over as Romania’s Prime Minister, designated by President Iohannis.

However in January 2018, Tudose resigned after his own party, PSD, abandoned him in an internal power struggle with the party’s all-powerful chairman Dragnea. He was replaced by PSD’s Viorica Dancila, a former member of European Parliament, who was now Romania’s first woman prime minister.

From PSD to PNL

In November 2019, Ludovic Orban, the leader of the centrist National Liberal Party (PNL), took over as prime minister, after the divided and scandal-ridden PSD was overthrown in a no-confidence vote, and was tasked to form a transitional government until a parliamentary election is held. However barely a year after, Orban resigned over poorer-than-expected election results.

So in December 22, 2020, Iohannis designated finance minister Florin Citu to form a new government on behalf of a centre-right coalition of three parties formed around the PNL. Just a day after, the coalition got 260 votes out of 455 MPs present – 32 votes more than necessary.

However after nine months in power, most of which were marked by political stalemate, Citu’s centrist government has been toppled by a no-confidence vote in October 2021.

Alliance between former rivals

Defence Minister Nicolae-Ionel Ciuca, a close ally of President Iohannis and a member of the centrist PNL, was appointed prime minister in November 2021, following a coalition agreement with former rivals in the center-left PSD. Ciuca leads a cabinet with 8 ministers from his own center-right PNL, 9 PSD members and 3 from the ethnic Hungarian UDMR group.

The final tally of votes for the coalition was 318 MPs in favor and 126 against.

Despite some concerns raised with regards to the stability of the alliance, Ciuca reassured the parliament and said that “above any ego and any political adversity, there is the interest of Romanians.”

The new government will have to address the devastating impact of the pandemic in the country, as well as the rising inflation. It is also expected to implement the reforms demanded by the European Commission under the coronavirus recovery fund, in which Romania is set to receive the first tranche amounting to about EUR 30 billion.


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