Hello,
As every month, we bring you the hottest international real estate news from around the world.
This month we want to draw your attention to:
A. Fitch has upgraded the credit outlook of Romania.
B. Residential property price declines since the start of the year in Hungary.
C. The minimum wage in Greece rose on 1 April to 780 euro/month.
D. A new app in Greece makes it possible to check a property's value.
Enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece's minimum wage rose from 1 April
Against the backdrop of demonstrations in Athens against the government and the cost of living, for the third time since 2020 the Greek government raised the minimum wage on 1 April, by 9.4%, which will now stand at 780 euro a month. Greece's workers' organizations demanded that the minimum wage rise to 826 euro/month to enable the weaker sections of society to get by as inflation intensifies.
A new app in Greece makes it possible to get a valuation for real estate properties. In addition, a reporting system for notaries on real estate transactions has been developed
A new app launched at the end of 2022 by the Greek government (valuemaps.gov.gr), which is also open to foreigners, makes it possible to get information on the value of real estate properties.
By using the map in the app, the user can:
- Find directly and precisely the area within whose boundaries the property the user is interested in is located.
- Access all the digital elements of the objective value determination system related to the relevant area.
- Calculate the objective value of your property for use in all the document forms to be submitted to the authorities relating to a transaction through the objective value determination system.
- Compare the value in neighboring areas or the value of the same area at different time intervals.
Kyriakos Pierrakakis, the Greek Minister of Digital Governance, announced the development and launch of a real estate transaction reporting system that will make it easier for notaries to report to the authorities. The system will allow notaries to obtain online information on properties registered in the land registry that have a cadastral record and are free of any restrictions (a process that until now required notaries to collect information from several local and national authorities).
Is the residential real estate market in Hungary in crisis?
Since the autumn, real estate professionals in Hungary have been reporting stagnation, with some noting that since January this year they have even been witnessing price declines as a result of falling demand.
László Balogh, a senior economist interviewed by Index.hu, noted that this year there has been a radical change in the real estate market compared with what we have become used to over the last seven years, and the current situation, he says, plays in favor of buyers. Property prices tripled during the seven years of dynamic expansion in the housing market. This did not cause problems for buyers, because in addition to the expansion of state subsidies, interest rates on housing loans also became cheaper. Many people therefore compensated for the rise in prices and took out larger loans (in the summer of 2021 the interest rate on mortgages was 2-3%).
One of the main reasons for the reversal of the trend in the housing market is that inflation, which began to rise following the Covid pandemic, doubled following the war in Ukraine. As a remedy for high inflation, central banks in many countries began raising interest rates. This scenario also took place in Hungary. “As a result, instead of apartment loans of 2-3 percent, even the most favorable bank offers start at 8.5-9 percent. However, apartment buyers do not really want to go into debt at such interest rates,” he said.
At the same time, “since last autumn, stagnation has been noticeable in apartment market prices alone. Since January a price decline can be seen in some places, stemming from the drop in demand,” he noted.
In Budapest and the main towns, demand has halved, and the same change can be seen in both new and used apartments. There is currently no segment of the housing market that is not affected by the reversal of the trend. Cheaper loans are essential to revive the housing market.
The Romanian dream at its peak: a new record for villa sales to young families in Bucharest.
According to a study by Romania's major real estate listings portal, a record in villa purchases was recorded in the Bucharest suburbs in 2022. The price per sq.m. continues to rise in the last quarter as well, and demand in the market exceeds supply.
This morning a survey was published by imobiliare, Romania's major real estate listings website, according to which demand for villas among young families continues to rise. After the Covid crisis and lengthy lockdowns we identify a growing trend of young families flocking from the city center to private homes with a garden in the city's suburbs (about a 20-minute drive from the city center). These areas offer young couples a better quality of life for raising children, natural open spaces, gardens, international schools, leisure and shopping centers and more. Also, many continue to work from home and therefore need more space than a two-room apartment in the city center. Others enjoy a quality of life without traffic jams on the way to work in the high-tech area, which is only about a 10-minute drive away.
Colliers - Romania's housing market is more attractive to apartment renters
According to a report by the international real estate consultancy Colliers, apartment prices rose by an average of 38% across the European Union in 2015-2021. Romania saw a rise of 34%, the lowest in the Central and Eastern Europe (CEE) region, compared with the five other large economies: Hungary (+108%), the Czech Republic (+84%), Slovakia (+54%), Bulgaria (+49%) and Poland (+48%). In Bucharest and the large cities the price increase was much higher than the national average.
As long as inflation stays high, and even continues to rise, interest rates will remain high for some time, loans will be less worthwhile, and therefore renting a home is becoming an increasingly popular choice among Romanians too, and this trend is drawing the attention of large investors. Until 2021, the Czech Republic and Poland were the main destinations for investors, but since last year, some have expanded their activity to Romania and Serbia, where they are already developing residential projects for rent only.
Until two years ago the residential market was fairly comfortable for buyers, because if they managed to save the money for a down payment, the interest on the loan was significantly lower than the rent for a similar property. In Bucharest and the large cities, mainly in central areas, this situation has now reversed, with rents for new apartments as much as 30% below the mortgage payment. And although rents rose by an average of 10% in Bucharest over the past year, renting a home remains a more worthwhile option than buying, according to Colliers advisors. By comparison, in Warsaw and Prague, for example, rents rose between 25% and 40%. In all the large regional capitals except Sofia, rents are now lower than bank loan payments.
Although Romanians' interest in renting a home is growing, the desire to become homeowners remains high. On the other hand, looking beyond the gap between rent and interest, Romania remains a more affordable country for buyers than other countries in Eastern Europe. According to Colliers data, a couple in Bucharest needs 4.2 years on average to save the money for the down payment required for a mortgage, compared with 7.5 years in Budapest or 8.5 years in Bratislava. Average sale prices for new homes in Bucharest stood last year at about 1,800 euro per sq.m., while in Warsaw the price was 2,800 euro per sq.m., in Budapest - 3,400 euro per sq.m., in Bratislava - 4,100 euro per sq.m., and in Prague it reached 5,500 euro per sq.m.
Over time, it will not be only the difference between the loan repayment and the rent that leads to a greater wish to rent. Similarly, generational change and greater flexibility at the workplace, sought especially by young people, will lead at least to a postponement of the decision to buy a home.
In terms of supply, Romanians and Bulgarians have the biggest problem with overcrowding, with almost 50% of the population living in overcrowded housing, more than double the European average of 20%. The war in Ukraine also had a significant effect on the rental housing market, mainly in Poland, while in Romania the effect was limited, according to Colliers advisors.
Another segment with significant growth in Central and Eastern European countries is the private student housing market, and Romania, with almost 600,000 students, is in line with the growth trends. The number of accommodation units in private student housing now exceeds 2,000 in Bucharest, similar to the Czech Republic, for example, which has only half the number of students that Romania has. But most Romanian students stay in dormitories of public universities and colleges, or live with their parents, or rent apartments.
Deloitte - Romanian real estate companies forecast a slowdown in 2023
More than half of the real estate companies in Central and Eastern Europe forecast a decline in market activity and investment volumes, against a backdrop of uncertainty related to the development of the conflict in Ukraine, but a similar percentage (46%) estimate that current average investment yields will rise, according to Deloitte's 2023 Real Estate Confidence Survey for Central Europe, conducted in Poland, the Czech Republic and Romania. As for the development of yields, players in Romania are the most optimistic - only 10% forecast a decline in returns in the period mentioned, compared with 14% in the Czech Republic and 36% in Poland.
According to the study, 61% of participants forecast that the general economic climate will deteriorate this year. Even so, most investors say they are going to buy more (44%), while 39% are considering freezing their investment activity.
“The study reveals that the Romanian market is closely tied to the Central and Eastern Europe region, with certain characteristics. For example, local players are more pessimistic about overall market activity this year, but 90% forecast that current investment yields will be stable or will rise. Also, Romanians are less pessimistic about the overall economic climate in their country compared with the rest of the participants, but on the other hand, they are concerned about the prospects for the tax climate, that is, about increased taxation, in light of the announced property tax reform, which has been postponed for now. Nevertheless, in the current context, the study results point to a balanced position among real estate players, characterized by caution and consolidation of market activity in the countries where they operate,” said Alexandra Smedoiu, partner at Deloitte Romania and head of the real estate practice.
Credit rating agency Fitch changed its outlook for Romania's economy from negative to stable
The credit rating agency Fitch changed the outlook on Romania's BBB- credit rating from negative to stable, based on the stabilization of Romania's public debt/GDP in 2021-2022 and the implementation of policies aimed at ensuring gradual fiscal consolidation, and also notes that Romania's credit fundamentals were relatively resilient to the shock of the war in Ukraine and the subsequent energy crisis in Europe.
The agency forecasts GDP growth of 2.3% in 2023 and 3.0% in 2024, well above the eurozone's growth forecast. In addition, the rating agency notes that inflation rose very steeply in 2022 in Romania, as in most European countries, and stands at 12%. Inflation is expected to fall this year, and Fitch forecasts average annual inflation of 9.3% in 2023 and 5.6% in 2024, still significantly above the 2.5% target.
Apartment prices in Bucharest - March 2023
The survival of the real estate market in Ukraine in the shadow of the war
According to the article, Ukraine's housing market, which developed rapidly until February 2022, has since the Russian invasion fallen into almost complete stagnation, and buyers avoid transactions despite discounts offered by developers. Real estate analyst Anton Palyonko notes that the volume of sales of apartments under construction fell by 80% to 90% compared with 2021, construction material prices tripled, and the government loan program eOselya granted only 741 loans during the year. The article also describes how an architecture studio from Kyiv temporarily relocated its employees to the west of the country and later expanded its activity to markets abroad.
Source: Kyiv Post
For the first time in a decade: US home prices are falling
According to data from the US National Association of Realtors (NAR), the median sale price of existing homes fell in February to 363,000 dollars - an annual decline of 0.2%, the first in more than a decade, which broke a streak of 131 months of increases. In the same month the volume of existing home sales jumped by 14.5% to an annual rate of 4.58 million, alongside the decline of mortgage interest rates to just over 6%, but it is still 22.6% lower than a year earlier. The sharpest price declines were recorded in the western and northeastern US.
Source: Ice
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית