Highlights of rental housing market in 2008
Gabriel Alexandru, vice president of Century 21 Romania, said in 2008, the prices for leasehold tenures had taken a 15% hike until October. However, things have changed starting October.
“Subsequently, rents have taken a downward trend. We have seen a roughly 10% correction in prices from prior year,” said Gabriel Alexandru, adding that this fallout was triggered both by the tougher lending conditions for mortgage loans, and by the international crisis.
The global financial crisis and domestic real estate crisis have hardly hit the rental housing market, and those who needed a dwelling, turned from potential buyers into potential tenants, while those who wanted to make profit from their real estate, started to rent the place, failing to find buyers at the price they were requesting.
“We have seen a similar behavior amongst developers. Oversupply have also started to have an effect, causing a 10% correction in prices from a year earlier”, said Gabriel Alexandru.
Anda Marian, Head of Residential Department at MediaCity explains how the prices continued their uptrend only in the first part of 2008. She signaled a nearly 10-15% growth for luxury apartments, compared to 25% in 2007. In case of single apartments, the growth was 2.25% while the rents for three-room apartments rose 13%, and 7% for four-room apartments.
“However, the second part of the year was dominated by substantial growth of supply in the midst of the new market conditions. One of the direct after-effects of the supply growth was the slowdown of rents’ growth pace, by a 5% margin”, Anda Marian told Wall-Street.
In September, the rents hit a one-year high, but as of this moment, Anda Marian said, the market uncertainty and the situation of scarcely-low-priced-traded old housing units had lead to landlords’ orientation towards leasing, as an alternative to selloff on an extremely volatile market.
Slowed deals enhanced the rental offer, but they failed to lower the price
According to the monitoring report of AnunturiParticulari.ro, over 2,000 single apartments and 2,3 and 4-room apartments were put up for leasing in January-November 2007, compared to 16,900 a year ago.
“Although the broad supply should have lead to a price decline, in 2008, the rents continued to grow, but at a lower pace. Toughened lending conditions for mortgage loans turned the potential buyers into tenants, and have also balanced the supply and demand”, said Silvia Vilceanu, general manager at AnunturiParticulari.ro.