Price declines after three years of crisis: almost none in lei for new apartments

18 apr 2011 Autor: Cristi Moga

The prices of new Bucharest apartments have dropped, almost three years since the onset of the real estate crisis, by just 15-17% in a series of housing complexes, a "discount" that for potential buyers is practically cancelled out by the 13% leu depreciation. Over 90% of Romanian employees are paid in lei, without taking into account the trend of the national currency against the euro.

In April 2008, when Bucharest apartment prices started going down, the euro/leu exchange rate stood at 3.64 lei, while in March 2011 it reached 4.16 lei. During the same interval, average salaries nationwide remained constant, with increases in certain sectors being offset by budgetary system cuts.

Under the circumstances, some developers collected in the same lei sum for built apartment.

The major difference for house buyers is the VAT rate, cut from 19% to 5% for apartments with areas of below 120 square metres and with prices lower than 380,000 lei, but this almost 12% price cut was covered from the state budget, not hurting real estate developers' margins.