Rental rates fell 30% in 2009. Devaluation of the leu wipes out the decline

 Rents go down as the euro grows stronger

“The ‘communist’ apartment rentals fell by roughly 30% while at the housing units in the new residential compounds the decline stood at 20-25%. Largest decreases were recorded in Militari and Drumul Taberei”, said Lavinia Marciuc, managing partner at Coldwell Banker Banu Manta.

The fact that many homeowners who didn’t manage to sell their apartments at the prices they demanded and turned to renting fuelled a market saturation of properties to let, sparking a dramatic 30% decrease in rental rates.

“This year started with a constant contraction of residence rental rates, at a monthly 5% rate, and resulted in a 20% gap in March compared to prior-year period. Nevertheless, if we take into account the rapid appreciation of the euro against the national currency, the fall of rental rates is not huge”, said Silvia Vilceanu, general manager at AnunturiParticulari.ro.

As Lavinia Marciuc noted, if the currency rates stood within 3.5/euro range, and now the rates hover around 4.15-4.2, the slump in rental rates were not very significant if expressed in lei.

Since yesterday’s closing trades, a euro was rated at 4.1645 – 4.1665 lei, slightly up against the national currency. Since end-March, the leu gained mildly over 3% versus the single European currency.

New apartments left empty, causes rents for old apartments to dive

Market watchers herald a further widening of home price decrease, given the rising stock of new apartments put up for rent by developers who failed to sell them as they had expected.

“The majority of new residences will flood the rental market as a consequence to the generalized lockdown of sales. This would only lead to a deeper decline in rental rates”, Silvia Vilceanu stressed.

Therefore, the growing stock of residences to let for medium and premium segment is far from winning the race against the rental offer for old apartments. The gap between a new apartment and an old one stands at 25-30%. The situation is however different when it comes to luxury residential market, where the demand is considerably higher for new properties.

“It would be normal for the rent in a new apartment to be higher, but there is still no general rule governing the market. The rental rates will not be influenced by many other factors”, Silvia Vilceanu added.