Prices Of New Dwellings In Capital City Bucharest To Hike By 15-20% In 2008

The growth rate in prices for new dwellings in Romania’s capital city of Bucharest will slow down in 2008 to 15-20% following increased demand, given that house prices hiked in 2007 by an average 20%, according to data provided by realty consulting company Colliers International.

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The average sale price of an apartment in a residential complex reached EUR1,500 per square meter in 2007 compared with EUR1,200 in 2006, Colliers said Wednesday on the sidelines of a seminar on the real estate market.

According to Colliers analysts, the number of new dwellings will reach 6,500 in 2008, up by 5,000 units, compared with 1,500 in 2007.

As for the demand on the real estate market, Colliers representatives estimate an increase in demand, given that 4,200 new dwellings were sold in the first nine months of the year alone. Thus, estimations indicate that 6,000 new dwellings will be sold by yearned, double against 2006.

In 2007, nearly 40-50% of dwellings were bought for financial speculations on the market. However, Colliers says the level will go down to 30% in 2008 following price hikes.

George Margescu, general manager of Cefin Real Estate, said that the increase in prices would become unsustainable in the next few years.

Margescu explained that prices of lands and buildings might go up so much that realtors will no longer afford to invest in residential projects.

"Realtors will be faced with a lot of problems in 2008. Thus, they might as well sign partnerships with construction companies and thus boycott transactions involving plots of land at outraging prices," said Margescu.

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