Economist Radu Georgescu believes that in the next two years the price of apartments in Romania will drop by 50%. He analyzes how prices have risen: a two-room apartment in Bucharest, in 2000, cost $6,000, and now it’s $100,000. What happened in the meantime?
The price of apartments in Romania will decrease, says Radu Georgescu. PHOTO: Pixabay
Considering the average asking price for a 70 square meter apartment in Europe, the affordability level of purchasing such an apartment in Bucharest is among the highest both nationally and Europeanly, with 96.2 net average salaries required monthly, shows a study published at the beginning of the year.
Higher degrees of affordability are registered only in Brussels and Sofia (84.2 and 94.3 average net wages in the respective cities) among the large European cities and capitals. At the opposite pole are London, Munich, Paris or Zurich, where the average prices per useful square meter can exceed or even exceed €10,000 (Paris) or €16,000 (Zurich), being necessary in certain cases more than 200 net average salaries from the respective locations, a level more than double compared to that of Bucharest.
Also, the capital of Romania offers advantageous residential prices and compared to the region, low degrees of accessibility being observed in Prague (city with average asking prices that exceed €4,700/useful square meter on average and where 196.7 net average salaries are required for such of apartment), Bratislava (171.5 salaries), Warsaw (165.3), Belgrade (161), Cluj-Napoca (158.2) or Budapest (150).
“I think in the next 2 years they will decrease by up to 50%”
In this context, many analysts claim that apartment prices will increase in Romania.
Economist Radu Georgescu has a different opinion:
“There are some who tell me that apartments in Romania are cheap. I think they are excessively expensive. Others tell me that apartment prices will rise. I think that in the next 2 years they will decrease by up to 50%”.
In 2000, the economist bought a two-room apartment in Bucharest, Drumul Taberei district, for $6,000. “I was a junior accountant in a multinational company and my salary was $500. So a 2-room apartment represented the 1-year salary of a junior accountant“, he elaborates.
He did not take out a mortgage. In Romania, this product does not even exist in banks.
Banks have discovered the “golden egg”
“Now, the same apartment costs 100,000 euros, which is the 10-year salary of a junior accountant. How can you say that apartments in Romania are cheap? What mathematics is this?”, asks the specialist rhetorically. In 2005, he says, banks discovered the “golden egg” – it’s called a mortgage loan.
“Banks started saying: Did you save 2,000-3,000 euros? No problem. We give you a loan of 30,000 euros and you pay it back in 30 years. wow Perfect. We take creditt”, continued the economist.
But what the banks didn’t say is that in 30 years you pay 60,000 euros in interest to the bank.
“That is double the price of that apartment. In 2006 the price of my apartment of 6,000 dollars became 40,000 euros. Magic? Not. Just the mortgage you have to pay the bank“, he specified.
In 2021, Georgescu was at a wedding. “At the table was a 25-year-old guy. He told me he bought an apartment for 200,000 euros. He told me he can afford it because he works in IT. I asked him how much time he could afford? I understand that he allowed himself 2 more years. Last year the company he worked in restructured and he lost his job“, he tells.
Georgescu told the children that they must excel in three subjects: mathematics, grammar and English.
“For the rest there is Google. If you don’t know when to write one or two i’s, no one will take you seriously. If you don’t know English, you can’t get a job (maybe only in the state). If you don’t know math, you will have financial problems. You will spend more than your salary, you will make unnecessary loans, etc“, he concluded.
