Real Estate Prices In Romania To Keep Rising - IMF

Real estate prices in Romania will continue to rise as foreign capital inflows have not saturated the market, Juha Kahkonen, senior consultant with the International Monetary Fund said Wednesday in Warsaw.

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"When capital enters a country, it is normal that resources are directed to assets, and that drives prices up. In some states, this process is well underway and real estate prices have started to lower, like in the Baltic states," Kahkonen said at the presentation of the Fund’s "Regional Economic Outlook" report.

He added Romanian authorities must carefully manage the situation to avoid turbulence when the reverse process starts.

"What goes up must come down," Kahkonen added.

Kahkonen also added the country needs macroeconomic policies to make sure there is not an excessive demand for lending.

Romania’s central bank has repeatedly stressed that part of foreign investments are directed at the real estate market, where soaring demand allows major price hikes.

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