Romania’s Booming Property Prices May Steady In ‘09 – FinMin

“The rumors that growth in the construction market will slow down come from investors. It’s very likely that prices won’t rise as fast as in recent years, but they might steady as of next year on rising supply,” Vosganian said during a financial seminar.

He said property prices in Romania have risen rapidly in recent years compared with neighboring countries amid a low supply and long-delayed real estate projects in a post-communist country ruled by unrelenting demand.

Romania’s low foreign direct investment inflows until 2004 compared with other countries in the region also had a negative impact on the development of the country’s real estate sector, Vosganian said.

Until 2004, the country’s annual FDI topped around EUR1.5 billion, compared with around EUR9.1 billion FDI attracted in 2006.

In recent years, real estate projects have mushroomed in Romania, with large investments announced by major players from Germany, Great Britain, Ireland, Israel, Spain and the U.S.A., but prices have skyrocketed amid a booming demand.

Romania’s central bank governor Mugur Isarescu warned last week over soaring property prices and said there is reason of great concern if the current prices are real.

Isarescu also referred to comments indicating the real estate market will crack considering the current price levels and said it was all a matter of real and fake prices.

Romania’s central bank is currently talking to notaries public and the statistical institute to get a real picture of the country’s real estate market, where fake sale prices are announced and deals can be made at much lower values.