Market commentary by eToro analyst for Romania, Bogdan Maioreanu
Home prices in Romania rose at the end of Q1 2022 by almost 40% compared to 2015 according to latest Eurostat data. It is a bit less than the average of the 27 EU countries which recorded an almost 46% increase. In the same period the rent price increased only 18% in Romania and 10% in the EU. The Eurostat data is showing that Romania is far behind neighboring economies like Hungary with rent increases of about 43%, Poland, 40%, Czechia, 21%. But the same economies showed an increase of house prices of over 136%, Hungary,110% Czechia and 60% Poland.
Despite these spectacular increases in prices Romania, Poland and Czechia show a common characteristic. Investors polled in the recent eToro Retail Investor Beat are showing a low trust in the current real estate market. 54% of the Romanian and Czech investors and 50% of the Polish investors show lack of trust in the real estate market. While 49% of the Poles and 44% of the Czech investors are seeing the real estate market getting worse in the next 12 months, Romanians are more positive, only 38% seeing the market going worse while 30% are seeing it getting better and 29% not seeing any change.
With Robor on the rise, the mortgage loans are becoming more expensive. In five months the rate doubled, reaching over 7% per year, making the installment of a 350.000 lei 30 years loan taken in July more expensive with about 760 RON than if the loan was taken in February this year.
The same phenomenon we are seeing in the United States. The rate for a 30-year fixed mortgage is now 5.65%, up from 3.29% at the start of the year. While prospective buyers are starting to feel the more expensive loans, the house prices are still on the rise. The June US median listing price for active listings was 450,000 dollars, up 16.9% compared to last year and up 31.4% compared to June 2020. In large cities, median listing prices grew by 13.3% compared to last year, on average. In the US, the typical home spent 32 days on the market in June, down 4 days from the same time last year and down 37 days from June 2020. The rents are starting to cool down. After an 11.4% surge over the past year, median rent for a two room apartment in the US rose just 0.5% in June, while median three room apartment rent fell 2.9%. Less buyers on credit entered the real estate market, mortgage applications fell to a 22-year low this month, according to the Mortgage Bankers Association.
Contrary to their European peers, 54% of the US investors according to eToro Retail Investor Beat survey still believe in the Real Estate Market and 40% are seeing a positive evolution in the next 12 months. Regardless of differences in opinion about the evolution of the Real estate market, 78% of the Romanian and Czech investors, 71% of the Polish investors and 69% of the US investors are confident in their overall investments.
About Retail Investor Beat
Survey research conducted by Appinio from 7 to 17 June 2022. Previous waves were conducted quarterly in conjunction with Opinium. In total, 10,000 retail investors sampled across 14 countries, 1,000 in each: UK, US, Germany, France, Australia and Spain. 500 in the following: Italy, Netherlands, Denmark, Norway, Sweden, Poland, Romania, and the Czech Republic. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
About Bogdan Maioreanu
Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.
About eToro
eToro is a multi-asset investment platform that empowers people to grow their knowledge and wealth as part of a global community of successful investors. eToro was founded in 2007 with the vision of opening up the global markets so that everyone can trade and invest in a simple and transparent way. Today, eToro is a global community of more than 27 million registered users who share their investment strategies; and anyone can follow the approaches of those who have been the most successful. Due to the simplicity of the platform users can easily buy, hold and sell assets, monitor their portfolio in real time, and transact whenever they want.
