The fast-paced improvement in housing affordability in major cities has occurred both against the backdrop of wages rising three times faster than average house prices and a sharp decline in unit sales. Most affected by the decline was the new housing segment, amid caution and a decrease in the willingness of buyers to accept overly high price levels posted by property developers caught in the trap of significant increases in construction costs, coupled with rising interest costs.
Thus, at the end of the first half of 2023, the Kiwi Finance real estate index for apartments and houses reached a value of EUR1,483/square meter, up 5.5% compared with the end of the third quarter of 2022 (EUR1,406/square meter).
At the same time, the national average net wage rose by 15.5% to RON4,543 (EUR915) in May 2023 from RON3,933 (EUR800) in July 2022. Under the circumstances, the aggregate housing affordability index improved significantly to 1.62, a record high, from 1.76 nine months ago, although such a statistic at national level is not so relevant as are the trends at the level of large cities.
Looking at the major cities, although Bucharest’s housing affordability reached its best value since the modern mortgage lending period (after 2006) at only 1.38, the city was surpassed for the first time in this respect by Timisoara, where the affordability index improved to 1.30. Both indices were record affordability indices.
Timisoara recorded the fastest improvement in housing affordability among the major cities, as wages rose by 20.5% to RON5,157 lei (EUR1,039), the biggest increase in the country in the last ten months, while housing prices rose by only 1.2% to EUR1,347 per square meter, according to the Kiwi Finance index.
At the same time, the average net salary in Bucharest increased by 15.6% to RON6,042 (EUR1,217), while average house prices rose by 5.8% to EUR1,685 euro/square meter, the Kiwi Finance index shows.
(English version by Loredana Fratila-Cristescu)