“We expect a lower volume of transactions this year amid rising unemployment and economic downturn. Government measures such as the expansion of the subsidized mortgage lending program can provide real support to developers and homebuyers,” said Andreea Hamza, Senior Director Living Department at JLL Romania.
Residential sales will be affected differently by the pandemic depending on price range, JLL said. The most affected segment is that of properties priced at less than EUR1,300/square meter, which accounts for 64% of new housing on offer in Bucharest.
“Rising unemployment will mostly affect this market segment. A short-term effect will be lower eligibility of potential homebuyers to qualify for mortgage loans. The volume of transactions on this segment is expected to decline on the short and medium term and consequently asking prices may follow the same trend,” said Hamza.
The EUR1,300-2,000/sqm segment, which accounts for about 30% of new housing on offer in Bucharest and Ilfov, is expected to be more shielded from market fluctuations as prospective buyers in this category generally have higher income stability and are more resilient to economic uncertainty.
The lest affected market segment will be residences prices at more than EUR2,000/sqm, accounting for around 6% of the offer. JLL said it does not expect any change in appetite for high-end residential properties, which remains the most stable niche.
New residential stock on offer in 2020 is expected to be 10% lower than in 2019, at around 12,900 units. JLL noted the decline could be sharper in 2021 as the effect of the current crisis will become clearer in the long run.