Romanian Property Market Rising Fast. Yields Are Still Good

Despite rising tensions over corruption which have brought demonstrators en masse onto the streets, Romania's economy is healthy.

Low interest rates and an improving economy have caused Romania's housing market to grow robustly over the past year.  And there's lots of construction. “If I want to develop residential, it is a safe bet. The good news is that banks are financing such developments with good terms, so I might have quite a high return on my investment," says Ilinca Paun, Managing Director of Colliers International. The average selling price of apartments rose by 8.40% (8.56% inflation-adjusted) to €1,045 (US$ 1,155.98) per square metre (sq. m.) during the year to September 2016, based on figures from On a quarterly basis, house prices rose by 2.45% (2.81% inflation-adjusted) in Q3 2016.

All major cities in Romania experienced rising house prices during the year to September 2016:

In Bucharest, the capital, the average selling price of apartments rose by 5.34% (5.49% inflation-adjusted) to €1,144 (US$ 1,265.49) per sq. m.

In Cluj-Napoca, Romania’s second most populous city, apartment prices were up by 9.52% (9.68% inflation-adjusted) to €1,231 (US$ 1,361.73) per sq. m.

In Timisoara, the average selling price of apartments surged by 10.73% (10.88% inflation-adjusted) to €1,022 (US$ 1,130.54) per sq. m.

In Brasov, the average selling price of apartments increased by 6.85% (7% inflation-adjusted) to €920 (US$ 1,017.70) per sq. m.

In Constanta, the country’s oldest city, apartment prices rose by 5.07% (5.22% inflation-adjusted) to €953 (US$ 1,054.21) per sq. m.

The Romanian economy grew by 3.8% in 2015, and growth of 5% is expected in 2016. In 2017, the economy will still expand but at a slower pace of 3.8%, according to the IMF.

"Both residential supply and demand are gathering steam as a result of the favourable economic outlook and the newly introduced fiscal regulations," say Knight Frank. Romania house prices Romania’s new Fiscal Code was introduced on January 1, 2016. Most notably, it reduces the standard VAT rate from 24% to 20%, but also simplifies the tax collection process, to boost investment and economic growth. There are no restrictions on foreign nationals acquiring dwellings in Romania. Ownership of land is tricky, but companies incorporated in Romania as well as resident foreign nationals and non-resident EU citizens can acquire land.